The textile industry has blamed huge stocks held by the Cotton Corporation of India (CCI) for the recent spurt in prices of the fibre and asked the govenrment to offload them to help curb the spiralling cost.
In a letter to textile minister Santosh Kumar Gangwar on Thursday, Confederation Of Indian Textile Industry (CITI) chairman Prem Malik said:
“In some states like Andhra Pradesh, Telengana and Maharashtra, the CCI has bought large quantities through MSP operations and the total stock with the CCI is now about 8.3 million bales. There is shortage of cotton in these states at present and the local mills are forced to get cotton from distant places, incurring additional transportation and other costs.”
Malik said the huge stocks with CCI are pushing up prices and private traders are taking advantage of the situation because of the perception that non-disposal of cotton by the CCI would drive up rates even further.
Separately, RK Dalmia, chairman of the Cotton Textiles Export Promotion Council (TEXPROCIL), said on Friday the CCI was releasing only 3,000-5,000 bales per day. He demanded that the state-run agency sell at least 50,000 bales per day for a period of 100 days through the e-auction route, directly to actual users so that “prices stabilise in both national and international markets besides ensuring availability of cotton to cotton textile exporters.” If this is followed, by the end of 100 days the season will end and CCI will still be left with about 30 lakh bales of carry-over stock, he added.
Late last month, CCI chairman BK Mishra, however, had told FE that the agency didn’t intend to offload huge stocks immediately as that could worsen an already glut-like situation in the market and hurt realisations of farmers. “Around 25% of the crop is yet to arrive in the market. We will seriously think of offloading a good amount of cotton stocks once 90% of the crop arrival in the market is over. And when we sell a huge amount of stock, our focus would be on small and medium textile mills,” he had said.
However, CITI secretary-general DK Nair said the CCI had procured most of the cotton from states like Andhra Pradesh and even mills from Tamil Nadu, which were sourcing the fibre from Andhra Pradesh, are being forced to go all the way to Guajarat to buy the raw material.