October 14, 2015
The Southern India Mills’ Association (SIMA) has accused the Cotton Corporation of India (CCI) of quoting procurement prices for cotton that are much higher than the current market prices. SIMA has also urged the Union Textile Minister Santoshkumar Gangwar to restructure the CCI Board and ensure that CCI has a transparent and fair cotton trading policy.
In a letter to the minister, SIMA chairman M. Senthilkumar said that in 2014-15, CCI had bought up the entire volume of good quality cotton grown in Telangana, Andhra Pradesh and parts of Maharashtra and did not release them, for more than two months. This had caused tremendous shortage in the market. Despite the fact that CCI has now started selling cotton in smaller lots, its move to suspend sales in March and April had caused hardship to regular users in Telangana, Andhra Pradesh and parts of Maharashtra.
CCI began to hold more stocks after global prices fell following China’s cotton policy. CCI had to implement the MSP policy in 2014-15 and 2015-16 because the market prices were lower than the MSP prices.
SIMA has requested the minister to enable the textile industry to source cotton at international prices in order to stay competitive in the international market. It has also suggested that CCI should maintain transparency and sell its stocks in phases to stabilize the market and ensure that the Indian mills are able to procure cotton at prices less than the international market.
As a remedy for farmers affected by MSP, SIMA has recommended for Direct Benefit Transfer (DPT), which will enable farmers to directly receive the subsidy, like in China.