MUMBAI (Reuters) - State-run Cotton Corporation of India's (CCI) inability to offload bulging stockpiles has created a shortage in the market and lifted the price of the fiber, said an industry body on Friday.
The Confederation of India Textile Industry (CITI) has urged the government to direct CCI to dispose cotton stocks through e-auctions at reasonable prices.
CCI, which procures cotton at government-set prices, has bought 8.6 million bales from farmers in the year started Oct. 2014 but has sold just 300,000 bales (170 kg each) so far.
There is a shortage of cotton and local mills are forced to purchase from distant places, incurring additional transportation and other costs, said Prem Malik, chairman, CITI, said in a statement.
State-run Cotton Corporation of India (CCI) is set to suffer its steepest loss in at least six years from sales in the current season, highlighting the plight of an industry that is battling bulging stockpiles and waning demand from top buyer China.
"Cotton arrivals have tapered down substantially ... Therefore increase in cotton prices at this stage would be of no use to farmers. It will only benefit traders and harm the textile industry," Malik said.
India, the world's biggest producer and second biggest seller, estimate to produce 39 million bales this crop year ending Sept. 30.
(Reporting by Meenakshi Sharma; Editing by Anand Basu)
