Industry body Ficci has sought the Textiles Ministry's intervention for adequate and timely release of cotton by Cotton Corporation of India (CCI), saying it is required to ensure that the commodity is available to mills and industry at competitive rates.
"The role of CCI is primarily to ensure MSP (Minimum Support Price) operation for the farmers so that they get a remunerative price for their products.
"However, if the procured cotton is not released in time for the industry and is retained as a stock by CCI, it distorts the market and leads to artificial increase in prices, thereby making the user segment uncompetitive," Ficci Secretary General A Didar Singh said in a letter to Textiles Minister Santosh Gangwar.
The mills are largely dependent on CCI for their cotton supply.
According to Ficci, the arrival of cotton in the Indian market has dropped considerably in the last few days to 20,000 bales.
The total requirement of mills is close to 85,000-90,000 bales per day whereas CCI has been offering only 40,000 bales per day, which also has largely remained unsold because of excessively high prices.
Till date, CCI has sold 10.8 lakh bales of cotton and hence carrying stocks of 75 lakh bales, as it has bought 85.8 lakh bales of the commodity in the current season.
Indian cotton was cheaper than international cotton from the beginning of the current cotton year. But the situation has changed significantly now and the prices are substantially above the international prices mainly because of low cotton arrival in the market, Ficci said.
In states like Andhra Pradesh, Telangana and Maharashtra CCI has bought large quantities through MSP operations, creating a shortage of cotton in these states. The local mills are forced to buy cotton from distant places, incurring additional transportation and other costs, it said.
Pointing out that CCI's huge stocks are pushing up cotton prices all over the country, Ficci said: "Taking advantage of this situation, private traders are hoarding cotton because of the perception that non-disposal of cotton by CCI would push up cotton prices further.
"If CCI disposes off procured cotton in large quantities at reasonable prices, hoarding by private traders would also stop and they would be forced to sell the cotton at market prices," it added.
