The textile industry in Punjab feels that the Government's decision to allow cotton exports will lead to a rise in its prices and a decline in domestic availability.

It also fears that the rising cotton prices would put further pressure on margins of companies, which have still not come out of the sluggish phase.

“Because cotton export has been allowed, the prices of raw cotton will certainly go up and the stock availability of crop in the country will also be affected,” Vardhman Textiles Chairman, Mr S. P. Oswal, said.

The Government had on Monday decided to allow further cotton exports for 2011-12 marketing year ending September, on the back of higher production estimates.

Industry sources said cotton prices would soon inch up to the level of global cotton rates with the Centre giving nod for cotton exports.

At present, global cotton price rules at 99.85 cents per pound (453.59 gm), while cotton rates in domestic market stand at 87 cents per pound.

The industry expects that 15 lakh bales of cotton could be shipped out of the country with the fresh export approval and as a result the stock in hand will decline further. The country has already exported 113 lakh bales in the current season.

Similarly, Punjab-based Nahar Spinning Mills Managing Director, Mr Dinesh Oswal, said the industry would face shortfall in the availability of cotton.

The Government has “overlooked” the interest of the spinning sector, he added.

“How will the industry run when enough stock will not be there,” he said.

He also said that the Government had not maintained the level of opening stock of 50 lakh bales which had been decided earlier. “Either the spinning mills have to import cotton or curtail their production in the wake of less availability of crop,” Mr Oswal said.

Related Topics
comment COMMENT NOW