Spinning mills may get cheaper cotton in the domestic market soon with procurement agency Cotton Corporation of India (CCI) awaiting the Centre’s nod to go ahead with offloading of the white commodity at subsidised rates.
“We will go by the government directive. If it wants us to offload at cheaper rates we will do it. However, we have not received any notification to this effect so far,” CCI Chairman Subhash Grover said.
The Cabinet on February 5 decided to ask CCI to sell the cotton stocks, which was purchased at the minimum support price (MSP), at discount for bulk purchases as has been practised by the Maharashtra State Cooperative Cotton Growers Marketing Federation.
The move comes as a relief to the industry, which has long been lobbying the government for making cheaper cotton available for millers and traders following a substantial hike of the MSP of the commodity for this year.
“All cotton stocks created by the CCI should be offloaded promptly at international price to maintain competitiveness of the domestic industry as well as to avoid any artificial shortage in the country,” Confederation of Indian Textile Industry Secretary General D K Nair said.
The corporation has offloaded 1.2 million bales of cotton as on February 5 in the domestic market and exported about 9,000 bales, mainly to Bangladesh. The government has sharply increased MSP of standard cotton (long staple) to Rs 3,000 a quintal for 2008-09 from Rs 2,030 in the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 a quintal.
Since domestic traders resorted to only “need-based buying” following the major hike in MSP, the corporation had to purchase in huge quantities this year to provide remunerative prices to farmers and avoid distress sales by them.
The corporation has procured 6.7 million bales (one bale is equal to 170 kg) of cotton as on February 5 and expects to purchase about 9 million bales this season.
The government has allocated a supplementary non-plan budgetary grant of Rs 500 crore to compensate CCI against incurring losses on purchasing raw cotton at MSP. The corporation has asked for another Rs 2,000 crore to continue the MSP operation in the next financial year.
