The Government, textile industry sources allege ‘is intent on killing the domestic industry by repeating the past mistake,’ referring to the decision on export of cotton under OGL (Open General Licence).

Appealing to the powers that be to restrain themselves from taking such hasty decision, the newly elected Chairman of the South India Mills Association (SIMA) Mr S Dinakaran said that the announcement about allowing export of cotton under OGL from October 1 for the 2011-12 cotton season, came as a big blow to the industry.

Stating that the industry associations are not against cotton exports, Mr Dinakaran said ‘we are only requesting that such permission for export under OGL be made only from January 1, 2012 after considering the need to rebuild adequate buffer stock to meet the domestic industry’s requirement of quality cotton.’

While stressing the need for benchmarking government policies with competing countries like China and Pakistan to ensure raw material security, the SIMA Chairman appealed to the Government to immediately the notification (on allowing cotton exports under OGL from October 1, 2011) and allow exports only from January 1, 2012 after ensuring that at least 55 lakh bales of physical closing stock of quality cotton is available, as committed to the Group of Ministers.

With festival orders picking up, the spinning sector is hoping to reach break even levels and resume normalcy during October, provided the Centre announces a bail out package soon.

Industry bodies here have been seeking a bail out package of converting eroded working capital into five year term loan and improving the drawing power of the mills to procure cotton in the forthcoming season.

Mr Dinakaran said that if this bail out package is not announced, cotton traders would start to hoard and speculate on the prices, as was the case the last year.

The industry body has also urged the Government to consider giving two year moratorium on repayment of loans and interest to the mills so they remain financially strong and eligible to avail the TUF subsidy, restore the DEPB drawback benefit coupled with refund of DEPB/ drawback benefit suspended from April 2010 till date, withdrawal of the 10 per cent central excise levy on branded garments and made-ups to revive domestic consumption.

Industry sources say that the country should be able to double the monthly exports of cotton yarn to 120 million kg with the present spinning capacity, against the current export of 60 million kg a month, provided adequate quantity of quality cotton for domestic consumption is made available before exporting the same and allowing traders to hoard cotton.

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