September 30, 2016
The acute crisis in the industry has prompted 26 textile associations to press some key demands on the Centre, including to procure cotton when prices are lower and to make a decision on the long-pending cotton fibre security policy.
The decision, taken unanimously by 26 textile associations across the country, is to insist to the Centre to direct the Cotton Corporation of India (CCI) to procure 70 to 80 lakh bales of cotton during the peak season when the Indian cotton price rules lower than the international price, retain cotton as buffer stock and sell this quantity only to the actual users from May to September.
The stagnated growth in the cotton textile industry and exports is caused mainly due to volatility in cotton prices, said Southern India Mills’ Association chairman M Senthilkumar, who was a part of a delegation, which met union textile minister, Smriti Irani yesterday in Delhi.
The predominantly cotton-based Indian textile industry has faced acute crisis in the last eight years due to high volatility in cotton prices especially during the off season starting from May to September.
Though the cotton year is October to September, more than 80 per cent of the cotton arrives in the market from November to March and due to financial constraints and the three-month credit limit facility extended by the banks, spinning mills are forced to procure high cost cotton for at least five months.
The industry requested the Centre to announce cotton fibre security policy since 2007 after the removal of cotton from Essential Commodities Act, by extending a low cost working capital fund and ensuring adequate stock to use ratio of cotton to have a level playing field in the globalised environment, said Senthilkumar.
The cotton fibre security is very essential as more than 80 per cent of the textile manufacturing units are in the MSME category, which provides 35 million jobs directly, particularly for the poor masses of the nation, he said.
The cotton price, which was Rs 33,000 per candy of 355 kgs reached almost Rs 50,000 in July, thus increasing the clean cotton price up to Rs 65 per kg while the yarn price increased only by Rs 20 to Rs 30 per kg. This made mills incur a loss of Rs 20 to Rs 25 per kg in the last three months and several hundreds of mills had to cut down production from 20 to 35 per cent throwing lakhs of people out of jobs, he claimed.
Stating that the downstream sectors such as handlooms, power looms and apparel also incurred huge losses, and there was a decline in the export of cotton textiles, Senthilkumar said that the Indian cotton textile industry is already facing severe recession due to the tariff barriers and sluggish demand for cotton yarn in the domestic and export markets.