Higher procurement prices, low arrival, high power tariff and irrational taxation have put cotton processors and traders in Madhya Pradesh in a tight spot once again. A large number of small-scale units have been shifting their bases to the neighbouring Maharashtra over the past few months.
Last year, as many as 24 units were operational in Sendhwa town, 300 km west of Bhopal. Now, according to the MP Association of Cotton Processors and Traders, only 15 are exisitng, that too struggling to survive at hardly 25-30 per cent capacity.
“Total processing capacity of MP cotton ginning unit is 20 million quintals but this year arrival is likely to be around 4 million quintals. Bt Cotton has also aggravated our problem as now the season does not last till May as Bt Cotton arrival period is shorter than the local variety,” president of the association Kailash Agrawal said.
Burhanpur town has also lost seven cotton processors to Maharashtra this year. Till last year there were 12 units in the historic town.
The cotton processors had also demanded from the state government to exempt the commodity from entry tax but the government has refused and put the processors in more problem as neighbouring states levy nil entry tax.
“Entry tax exemption facility is available only for cotton mills and cotton procured for purpose of manufacturing types of fibre but not for ginning and pressing industry as it is levied in lieu of octroi,” said a government official.
Last year the state government had pruned mandi tax from 2 per cent to 1 per cent but since November last year, the state has again raised it from 1 per cent to 2 per cent, thereby leaving processors business costlier.
“We are supplying a cotton candy of 356 kg to yarn manufacturers at Rs 26,000 but our margins are very thin at maximum Rs 200 per candy while the same is more than Rs 1,200 per candy for a processor in Maharashtra,” secretary of the association Gopal Tayal said.
With an approximate combined turnover of Rs 1,000 crore, the cotton processing industry is again facing labour migration and closure.
“To avoid frequent power cuts we have opted round-the-clock power supply connections at higher rates but how long we can survive on higher power tariff”? Tayal asked, adding, “effectively power rates are not less than Rs 3.50 per unit for us in Sendhwa.”
Almost all cotton mandis; Sendhwa, Khandwa, Kukshi, Dhar, Dhamnod, Manawar, Khetia, Pansemal and Ajand have reported low arrival of cotton this year due to insufficient rains.
