South India Spinners Association (SISPA) on Monday urged the Tamil Nadu government to come out with a policy to protect MSMEs (micro,small, medium enterprises) in the wake of rise in price of cotton.
For this purpose, the government should esnure buffer stock of cotton and affordable raw material pricing mechanism, the association said in a press release.
The beneficiaries of the increase in prices are multinational companies (MNC) traders and the Cotton Corporation of India, the release quoted the president of SISPA S K Rangarajan as saying.
The ones affected were end-users and the farmers as the companies and traders buy cotton at MSP (minimum support price) and hoard them only to inflate the prices later, he said.
The SME mills do not have the financial capacity to buy cotton and store it, the SISPA president said.
In April, the price of cotton was hovering around Rs 38,000 per candy-level and reached Rs 48,000 in June, he said, adding that the SME sector was unable to repay their bank loan, resulting in NPAs (non-performing assets).