The revision of minimum support price (MSP) of cotton has affected not only the textile mills, the ginning mills in Punjab are also in a soup. About a dozen ginning mills in Abohar and Malot in the cotton-growing belt of Punjab have been shut down due to an unviable business situation.
According to Rajinder Garg of the Chirag cotton factory, which has its units in Fazilka, Giddarbah and Malot, most of the unit mills have stopped functioning because they cannot lift the raw cotton at Rs 2,800 per quintal (the MSP for Punjab).
He added the ginners paid the highest tax of 12.5 per cent in Punjab (2 per cent infrastructure tax, 4 per cent market fees and rural development fund, 2 per cent laccha hartiya commission and 4 per cent VAT) as compared to about 7 per cent in other states.
“Due to the unreasonable cost of inputs and high tax structure, we sell cotton to the spinning units at Rs 24,000 per 37.32 kg, where as they get the same from other states at Rs 22,000 per 37.32 kg,” he said. The leading textile houses in Ludhiana and Lalru are buying from other states due to the price difference.
Garg has three units with a cumulative capacity of about 50,000 bales per annum, as the family has been in this business for generations. “We do not have any other skills, so we want to continue at the minimum margins also,” he said.
He leased his Fazilka unit to the Cotton Corporation of India at Rs 490 per bale this year as the business for him became unviable.
The plight of other ginning mills in the state is similar.
Pankaj Sharda of Sharda Cotton Mill, which technically falls in the Sirsa district of Haryana, said the mill was dependent on cotton from Punjab. He had set up a new fully automated unit with an investment of Rs 4 crore recently, but is now doubtful of making optimum utilisation of his assets, due to the high cotton prices.
Sharda is also contemplating handing over his unit to the government agencies to cover his minimum costs.The association of ginning mills, the North India Cotton Association, has not been able to fight for their cause, Rajender Garg.
