Cotton trade may soon have uniform unit of measurement

In what is being seen as a major reform for the cotton trade in India, a committee empowered by the Textiles Commissioner of India is learnt to have proposed a uniform unit of weight for the domestic and international cotton trade.

The committee, which comprises of 7-8 representatives from the cotton trade, stakeholders, exporters and Cotton Corporation of India (CAI), has recommended a uniform unit of weight for cotton trading, in kilos or tonnes.

So far, cotton has been traded in different weight units at different parts of the value chain in different growing regions in the country. For example, Gujarat, the largest cotton producer, uses bales (each of 170 kg) for cotton procurement from markets, while kapas (raw, unginned cotton) is weighed in quintals. Ginned cotton is quoted in candies (355.62 kg each).

“A uniform unit of weight is very much required for the cotton trade in India. We have different units at different levels of the value chain. Even in different growing States there are different units for kapas. Somewhere it is quoted in maund, somewhere it is quoted in quintal,” said Arun Brijmohan Sekhsaria, a leading cotton trader, and one of the members on the Committee.

“Nowhere in the world is cotton procurement quoted in bales. It is necessary not in terms of price or volume but important for a uniform quality standard,” he added.

According to Sekhsaria, currently, the discussions on adopting a uniform unit of weight for cotton is at the level of the Textiles Commissioner's Office. “The Textile Commissioner has mandated the Committee to explore this possibility. We are exploring how it can be done. We have already recommended that buying should be in terms of kilos or tonnes only. This will make pricing accurate,” he added.

A decision on the same is likely to be taken at the next board meeting of the Cotton Advisory Board (CAB), constituted by the Government of India to estimate crop, exports and cotton trade in the country.

Traders happy Trader sources welcomed the move terming it a step towards more uniformity and transparency in the cotton trade. Says cotton exporter and sector expert Jagubhai Shah from Gill & Co: “This move will definitely help the cotton trade to a great extent. It was required as the price quoted in different States is based on different units of weight. It causes ambiguity and confusion for the exporters, who have to plan their purchases accordingly. Export orders have a +/-5 per cent variation in the weight. We aren’t sure exactly how much cotton will be there in a bale — 160 kg or 165 kg.”

Cotton has been quoted in different weights at different parts of the value chain. the At production level, while farmers get the price based on quintal weight, the procurement at the market/mandis is quoted in bales.

While the Government of India has fixed a weight of 170 kg for a bale, many states still have bales with 160-165 kg. Ginned cotton is quoted in candy, while exports take place in terms of tonnes.

However, there are different views coming from some traders, who believe having a uniform unit of weight would prove to be a futile exercise.

“The weight is almost uniform. International prices are quoted in US Cents per pound, while domestic prices are quoted based on bales, which has already been fixed by the Government of India. I think, there is no point in doing this exercise. It is not going to serve any purpose,” said MB Lal, a cotton expert.

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