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Troubled over the steep escalation in cotton prices and the Cotton Corporation of India’s (CCI) cotton trading policy, the mill sector has appealed to Union Textile Minister Smriti Irani to intervene and direct CCI to arrest the price rise.
Accusing the corporation of holding large volumes of cotton and quoting prices higher than market rates, industry sources said, “The Minister had revamped the CCI cotton trading policy and brought uniformity in the benefits extended by CCI (irrespective of volume) to protect the spinning units in the MSME sector. The Corporation’s present stand is not only affecting market sentiments but putting the competitiveness of the user industry at stake.”
“The minimum support price (MSP) was fixed at ₹5,550 a quintal and CCI covered around 50 per cent of the arrivals. CCI started procuring cotton in November, but began offering the same only last week and that too after accumulating over 35 lakh bales. The price quoted is more than the market price.”
Global prices
International prices of cotton has started to move north and this is reflected in the Indian cotton prices as well, said an industry insider, adding, “multinational traders started to cover as Indian cotton was cheaper than imported fibre.”
Stating that CCI should be prudent in pricing and rethink its trading policy, J Thulasidharan, Managing Director of Rajaratna Mills, and President of Indian Cotton Federation (ICF), wondered why the government was operating MSP through CCI instead of direct transfer to farmers or allowing free market to function. “It is neither helping the farmer nor the user industry. Only MNCs and trade are benefited,” he said.
Meanwhile, export booking is said to be happening in full swing.
Ashwin Chandran, Chairman of the Southern India Mills’ Association, said, “Cotton exports during the current season could peak to 60 lakh bales as against Cotton Advisory Board’s (CAB) estimate of 50 lakh bales, for already over 20 lakh bales are understood to have been exported. If the trend continues, it could result in a panic situation in the Indian market.”
“Mills are unable to source cotton from CCI as the base price quoted by the Corporation is ₹46,000 per candy while the market price is ₹40,000 a candy (of 355 kg).”
SIMA feels that industry-friendly cotton trading policy by CCI will help mitigate current challenges and enable the industry to grab the market opportunities in the wake of the thaw in the US-China trade relations.
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