Maharashtra spinning mills seek subsidy on cotton purchase from CCI

By: |
February 26, 2021 3:30 AM

Ashok Swami, chairman, Maharashtra State Co-op Textile Federation (MSCTF) said that the cooperative spinning mills in the state are finding it difficult to purchase cotton at the market rates since they have been in financial distress.

Indian cotton is still the most reasonably priced globally, and the industry is also getting good quality cotton at consistent price.Indian cotton is still the most reasonably priced globally, and the industry is also getting good quality cotton at consistent price.

The Cotton Corporation of India (CCI) has granted a subsidy of Rs 300 per candy to cooperative spinning mills in Maharashtra. The Corporation has also waived-off the security deposit of `2 lakh that the mills have to pay before participating in the e-auction process of the cotton body. The mills, however, say that this is not enough and have demanded a subsidy of Rs 2,500 per candy.

Ashok Swami, chairman, Maharashtra State Co-op Textile Federation (MSCTF) said that the cooperative spinning mills in the state are finding it difficult to purchase cotton at the market rates since they have been in financial distress. “The recession in the textile industry since the past five-six years, higher electricity rates than other states, rising cotton prices and no increase in yarn rates, high-interest rates on bank loans in addition to the trade war between USA and China have adversely affected the yarn business,” Swami said. Of the 150 spinning mills in the state, nearly 45 mills are closed, 70 are active and another 30 mills are in the process of construction.

“Cotton prices have gone up above the minimum support price (MSP) of Rs 5,825 per quintal and are currently ruling between Rs 6,300 per quintal and Rs 6,400 per quintal in the open market. CCI is currently selling cotton at Rs 47,000 per candy and with transportation charges, it costs mills around Rs 48,000 per candy which is not affordable. Imported cotton attracts a duty of 10% which again is not affordable for mills,” he added. “Cooperative spinning mills are not able to afford these rates and have therefore sought a subsidy of Rs 2,500 per candy. The CCI has granted a subsidy of Rs 300 per candy but this is not enough,” he said.

Of the total of 150 cooperative spinning mills in the state, only 70 mills are currently functional with an installed capacity of 14 lakh spindles daily. The annual cotton requirement is around 12-13 lakh bales and the sales turnover are Rs 2,500 crore annually. The state government has invested Rs 2,500 crore in these mills as shares capital. These mills give revenues to both the central and state government in the form of various taxes of Rs 200 crore to Rs 250 crore annually.

Swami said both the CCI and the state government have agreed to forward the demand of spinning mills for more subsidy to the Centre.

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