The Southern India Mills' Association (SIMA) today said India would have a comfortable closing stock of between 60 and 70 lakh bales of cotton by the end of the season 2014-15, ensuring better stability in prices during the current calendar year.
The industry has been subjected to crisis due to volatility in cotton prices for the last few seasons, but prices have been comparatively stable this season due to reduced imports by China and the oversupply position in the global market, SIMA Chairman T Rajkumar said in a statement.
As international cotton prices were ruling lower than Indian prices, Cotton Corporation of India had to venture into MSP operations and procured around 87 lakh bales during the season.
However, the selling policy of CCI not only affected the domestic market to a certain extent, but also resulted in the mills using certain varieties of cotton grown in Telangana and Andhra Pradesh facing shortage of quality cotton as CCI did not release the cotton on time, he said.
With bleak export demand, the carry over is likely to be around 70 lakh bales, which is the highest ever carried by India after 2008--09, he said.
Though the world cotton area is expected to reduce by seven per cent to 31.3 million hectares in 2015-16 and consequently global production is projected down nine per cent to 23.9 million tonnes, world supply position is expected to be comfortable in the next season as China would continue to reduce its imports and downsize its reserves,Rajkumar claimed.
India is also expected to have a comfortable cotton supply position during the cotton season 2015-16 and the market is expected to be stable, he said, adding this would greatly help the cotton textile industry leverage export performance particularly the garment and made-up segments.
He said textile mills used to carry three to six months cotton stock. Having suffered due to price volatility, mills have reduced the inventory level to one to two months.
Due to undue delay in getting the subsidy of Technology Upgradation Fund Scheme and also export subsidies during the season 2014-15, mills could not procure more cotton, he said.
