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G. Gurumurthy

Textile industry here considers the import of cotton would work out favourably for the mills going by the prevailing high prices for indigenous cotton.

COIMBATORE, April 24

THE fall in the yield of summer cotton in Tamil Nadu, due to drought, is affecting the State's spinners, particularly the small players who draw local cotton to replenish stocks.

Trade sources say this year's summer cotton yield would be within one lakh bales, as against the normal size of around three lakh bales.

The decline in the local cotton output has forced the small mills to look for alternative source of raw cotton supply.

The arrivals of summer cotton from within the State would offer as a buffer in raw material management for the small spinners who would consume the loose cotton procured from key local markets. This also helps them in tackling supply constraints they may otherwise face in sourcing cotton from far away markets.

The deficiency in the quality of cotton supplied from upmarket and the firming prices are the two factors haunting the spinners.

With the anticipated drastic fall in the State's cotton output this year, the small spinners are clamouring for removal of the import duty on raw cotton as many mills in the region are toying with the idea of going for cotton imports considering the fact that the prevailing dry spell may cause some problem for cotton cultivation this year also, local industry/cotton trade sources say. Many spinners fear that the current crop would get depleted by June/July leaving the end-users of quality cotton in a fix.

Textile industry here considers the import of cotton would work out favourably for the mills going by the prevailing high prices for indigenous cotton. The local cotton currently quoted at an average 58 cents per pound looks lower still compared to the international price of cotton, which is offered at 62 cents.

However, even a five per cent reduction from the existing 10 per cent import duty on cotton would give the much needed parity in prices between indigenous and imported cotton, thanks to another three or so percentage point gain in terms of quality fibre available in the import-sourced cotton.

After remaining sober last year, the import of cotton is expected to gain some momentum beyond May this year. Market sources say that import of about 15 lakh bales of cotton may be possible this year.

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