The Southern India Mills Association (SIMA) has advised textile mill owners to not indulge in panic purchase, following the Cotton Advisory Board’s (CAB) revision of expected cotton production for 2015-16 to 376 lakh bales. SIMA has further announced that the cotton position in the domestic and international market is very comfortable.

In a statement, SIMA Chairman, M. Senthil Kumar accused the traders of taking undue advantage and increasing the prices abnormally to Rs.48,000 per candy as against Rs.33,200 per candy, which was the prevailing price until April last.

Pointing out that domestic cotton cost Rs.3000 more than imported ones, he advised the larger mills to go for the latter, in order to bring down the prices of the former.

Contrary to the speculations of traders that cotton prices will increase because land under cotton cultivation has shrunk, the CAB has said that supply will remain comfortable.

Warning of further decrease in export of cotton due to the huge increase in its prices, he said that the international cotton price is over 10 percent lower than the Indian cotton textiles. He also pointed out that a large number of mills have reduced their capacity utilization to minimise losses. He said that the yarn price of 40s count has increased from Rs.6 to Rs.23 per kg in the last three months, while the price of clean cotton cost has increased by over Rs.40 per kg.

Senthil Kumar has appealed to the Centre to consider its earlier proposal of “Cotton Price Stabilization Scheme for Spinning Sector,” consisting of five per cent interest subvention for cotton purchase during the peak season of October to April, increasing the credit limit from three months to nine months, and reduce the margin money from 25 per cent to 10 per cent.

The CAB revised its earlier estimate of 380 lakhs to 376 lakh bales. The area under cotton cultivation has been decreased from 119.10 lakh hectares to 118.71 lakh hectares.