Traders oppose Govt proposal to set up cotton reserve

Various stakeholders in the textile value chain invariably agree to disagree.

The recent disagreement is with reference to the Textile Ministry’s proposal of creating a cotton reserve to ensure supply of the fibre to the domestic mill sector. Cotton traders oppose this move.

The President of the Cotton Association of India, Mr Dhiren N. Sheth, says that such a scheme would distort the market and unsettle other sectors of the cotton value chain.

Expressing concern over the proposal mooted by the Textile Ministry on procuring 25 lakh bales of cotton through the Cotton Corporation of India for creating a strategic reserve (for exclusive sales to mills), he said: “it is wrong to cite China for creating the cotton reserve, since the situation between the two countries are not comparable. China is a cotton deficit country, whereas we have huge surplus and the fibre is available at the doorstep of the mills here.’’

“The total investment for procuring 25 lakh bales would amount to Rs 5,000 crore approximately, not withstanding the carrying cost and annual warehouse cost. In addition to this, CCI will have to bear the loss that might arise due to fluctuation in prices.’’

“If mills contend that they are unable to stock cotton due to non-availability of funds, it would be appropriate to address this issue through banking channels, Reserve Bank of India and the Finance Ministry rather than create a scheme which distorts the market and unsettles other sectors of the cotton value chain,’’ Mr Sheth said and urged the Government to refrain itself from setting up a cotton reserve.

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