The Hindu Business Line : Textile sector opposes cotton support price hike

New Delhi, Aug. 23 The textile industry has said any proposal to hike the Minimum Support Prices (MSP) for cotton could further aggravate the downturn in the domestic textile sector. Reacting to reports of a hike in the MSP for the cotton season 2008-09, Mr P.D. Patodia, Chairman, Confederation of Indian Textile Industry (CITI), said that the move “will not only push the textile industry further down, but will also be counter productive even for farmers”.

Mr Patodia explained that the rupee appreciation of 2007 and the increase in raw material prices, interest rates as well as input costs during the current year have already drained out the cost competitiveness of the country’s textile value chain and the huge increases announced in MSP for cotton would aggravate the situation beyond redemption.

“During the last financial year and the first quarter of this year, most textile companies have made losses and many others have made substantially lower profits compared to the earlier years. These MSPs have eroded whatever hope the industry had of reviving in the near future,” Mr Patodia said.

In a statement, Mr Patodia said the standard variety of Shankar cotton is currently being quoted at Rs 24,500 a candy for the new crop, and the mills are finding it difficult to buy at this price, because of the industry’s current downturn. The MSP of Rs 3,000 would translate to Rs 26,000 a candy for this cotton and this is bound to reduce consumption of Indian cotton by mills, the statement said, adding that the only options before the mills will be to import cheaper cotton from abroad, switch over to man-made fibres or close down.

“There is going to be chaos both in the industry and farming sectors, unless the Government is able to take immediate remedial action to sustain cotton consumption by reducing the MSPs or by assisting the industry to absorb the extra cost,” Mr Patodia said.