It has also earmarked Rs 25-crore corpus fund to assist the mills in their cotton buying estimated to cost around Rs 50 crore.
Usually late and fragmented purchases have eaten into the profitability of mills, so this time there is more planning to cut raw material procurement costs, Kerala Industry Minister Elamaram Kareem told FE.
Cotton planting starts from June and the crop is harvested around October in North India.
Although bulk-sourcing of raw materials is an option for mills but Kerala has not been able to do so because of cash crunch. The setting up a purchase corpus and better planning could give better buying efficiency to the state in procuring cotton. Indias cotton production in 2008-09 is estimated to be around 230 lakh bales (1 bale=170 kg), while exports are estimated to be around 65 lakh bales.
Keralas demand for raw cotton too is likely to escalate in the coming years because of the interest in reviving existing mills. Besides modernizing and adding skilled labour, 11 state owned mills are moving up the revival path.
Balaramapuram Spinning Mill, which is back on track, will now focus on the Rs 150-crore furnishing cloth market in South India, said P Ganesh, MD, Balaramapuram Spinning Mill.
We had been test-running the machineries and finished product output has been convincingly cost-competitive with the product of Tamil Nadu industry, who now command market in furnishing cloth.
As the milling capacities grow, domestic demand for cotton may get threatened by the export projections. According to a projection by International Cotton Advisory Committee, cotton output may increase significantly in India in 2009-2010. ICAC also expects India to account for the most of projected 8% increase in World cotton trade.