Textile industry seeks cotton fibre security policy

The textile industry has urged the Centre to come out with a cotton fibre security policy and curtail volatility in cotton prices from the coming season.
The industry also requested the government to direct Cotton Corporation of India to procure 70 to 80 lakh bales in peak season when prices rules lower than global rates and retain cotton as buffer stock and sell this quantity only to actual users during May-September.
The decision was taken unanimously by 26 textile associations of the country, as the predominantly cotton based textile industry has been facing acute crisis during the last eight years due to high volatility in prices especially during off season starting from May to September.

Though the cotton year is October-September, more than 80 per cent of cotton arrives in the market during November to March. Due to financial constraints and three months credit limit facility extended by banks, spinning mills are forced to procure high cost cotton for at least five months, Southern India Mills' Association chairman (SIMA) M Sethilkumar said.
The stagnated growth in the cotton textile industry and exports was mainly due to volatility in prices, Sethilkumar said, who was a part of the delegation which met union textile minister, Smriti Irani yesterday in Delhi.
He said SIMA had been urging for announcement of a cotton fibre security policy since 2007 after removal of cotton from Essential Commodities Act by extending a low cost working capital fund, and ensure adequate stock to have a level playing field in the globalised environment.

The cotton fibre security is very essential as more than 80 per cent of textile manufacturing units are in the MSME category, which provides 35 million jobs directly, particularly for the poor masses, he said.

Cotton price, which was Rs 33,000 per candy of 355 kg, had touched almost Rs 50,000 in July 2016, increasing the clean cotton price up to Rs 65 per kg.
Yarn price increased only by Rs 20 to Rs 30 per kg, thus making the mills to incur Rs 20 to Rs25 per kg loss in the last three months. Several hundreds of mills had to cut down production from 20 to 35 per cent, throwing lakhs of people out of jobs, he claimed.

Stating that downstream sectors like handlooms, powerlooms and apparel also incurred huge losses and there was a decline in export of cotton textiles, he said the cotton textile industry is already facing severe recession due to tariff barriers and sluggish demand for cotton yarn in domestic and export markets.
In such a scenario, high volatility in price has made several hundred spinning mills unviable and NPAs, he said.
He urged the government to come out with a cotton fibre security policy,a long pending agenda, curtail volatility in cotton prices from the coming season onwards and ensure enough stock-to-use ratio of 25 per cent.