It may be recalled that in a bid to protect the interest of the domestic textile mills, the Southern India Cotton Association (SICA) has proposed to formulate a standard contract for the import of cotton. As per sources, SICA has already framed the draft contract and would discuss the norms finalised under the contract at the forthcoming meeting where there will be the representatives of the importing mills besides the brokers and agents.

The forthcoming meeting with ICMF, having a large number of textile mills as its members, who are importinglong staple and extra long staple varieties of cotton in bulk from various overseas countries, would seek views of the mill owners, agents and brokers over the terms and conditions drafted in the contract. The draft contract would be finalised after incorporating the views of the importers and once it meets their approval, it will be circulated amongst the shippers.

SICA has decided to draft a standardised contract so as to settle the disputes arising between the buyers and the sellers due to varying terms and conditions of the contract and also to help the cotton importing mills in the region to come out of the clutches of these foreign based associations.Usually the problems associated in the import of cotton relates to the quality complaints, banking procedures, exchange problems, delay in shipment, LC, sampling procedures besides the delivery schedule.

Sources said that the new draft contract worked out by SICA would clearly spell out details related with the quality, specifying the country oforigin/growth, crop year, staple length, colour, contamination, type, the price, shipment details including date of shipment and net landed weight at the destination etc , quantity, name of the agent besides details of the overseas counterpart of the local preshipment inspection company.

The contract would also include some other details related with the quality. While drafting the format of this new contract, SICA has also held discussions with its counterpart associations based in Hong Kong, Sri Lanka, Bangladesh, Pakistan, Thailand, Korea and Malaysia. Sources said that a similar contract has been finalised by Bangladesh for cotton imports. This contract has also been referred to by SICA while framing the guidelines of the draft contract.

It may be mentioned here that currently the mills are entering into contract with the overseas sellers on the basis of the bye laws governed mainly by the format of the two associations - the Liverpool Cotton Exporters Association and the Alexandria Cotton ExportersAssociations. This format is, however, do not meet the importers aspirations. These bye laws, it is largely felt amongst the industry, have outlived their purpose and though some modifications have recently been carried out there are still may provisions which fall short of the modern day requirements.

Moreover, many mill owners are not even aware of all the rules of the associations. Besides drafting the contract, SICA is also in the process of preparing a `caution list to warn, in advance, the importers about the `problematic errant shippers. The International Textile Manufacturers Federation in Geneva has already done some exercises in regard to import of cotton purchases, and has prepared certain guidelines on cotton purchases.