Mills seek govt intervention for sale of cotton by CCI at market price

By: |
Published: January 14, 2020 12:20 AM

As per the market information, over 20 lakh bales of cotton have already been exported from the current cotton crop, and export might reach the level of 60 lakh bales as against 50 lakh bales estimated by CAB.

Hence, the union textile minister should instruct CCI to sell the cotton at market price so that the spinning mills could procure the same at a competitive price, the SIMA chairman pointed out.Hence, the union textile minister should instruct CCI to sell the cotton at market price so that the spinning mills could procure the same at a competitive price, the SIMA chairman pointed out.

A spinning mills’ body has asked the Union government to direct the Cotton Corporation of India (CCI) not to hoard the commodity and sell it at market price on a regular basis.

“China, the largest consumer of cotton, has depleted its cotton reserves significantly in the last few years. Moreover, its trade war with the US is expected to end soon, China has geared up to import huge volume of cotton from the US and India (the largest cotton producing countries in the world), said Ashwin Chandran, chairman of the Southern India Mills’ Association (SIMA) in a communication to the union textiles ministry.

As per the market information, over 20 lakh bales of cotton have already been exported from the current cotton crop, and export might reach the level of 60 lakh bales as against 50 lakh bales estimated by CAB. If the same trend continues, it may result in panic situation in the Indian cotton market. Hence, the union textile minister should instruct CCI to sell the cotton at market price so that the spinning mills could procure the same at a competitive price, the SIMA chairman pointed out.

According to him, mills were not able to source cotton from CCI as the price quoted by CCI is exorbitantly high when compared to the market price. CCI is quoting Rs 46,000 as the base price as against the market price of Rs 40,000 per candy of 355 kg.

CCI should adopt industry-friendly trading policy which would not only facilitate to mitigate the current challenges, but also enable the industry to grab the market opportunities in the aftermath amidst the US-China talks to end the trade war, he added.

He said that the pre-dominantly cotton based Indian textile industry often faces crisis due to volatility in cotton prices. Apart from the multinational cotton traders, who cover cotton in large volume during peak season, hoard the cotton and speculate the prices. The trading policy of CCI also often aggravates the market.

Despite union textile minister Smriti Irani’s efforts in revamping CCI cotton trading policy by bringing uniformity in the benefits extended by CCI irrespective of volume to protect the interests of MSME spinning units, CCI continues the practice of holding the cotton in large volume and quoting higher price than the actual market price that affects the competitiveness of the actual user industry, Ashwin said.

The minimum support price (MSP) was steeply increased by 26% to 28%. CCI has to exercise MSP operation during the current season. The government allotted Rs 2,017 crore in the union Budget 2019-20 to exercise MSP operation. As the cotton price varies between Rs 4,700 and Rs 5,250 per quintal depending upon the quality, and MSP is fixed at Rs 5,550 per quintal, CCI is covering around 50% of the cotton that arrives at the market under MSP operation. Though CCI started the procurement during November, it has started the offer only during the last week after accumulating over 35 lakh bales of cotton and quoting at high price than the actual market price, he said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Diesel prices hit new all-time high; check fresh petrol prices in Delhi, Mumbai
2Tomato prices further rise to Rs 70/kg in Delhi
3India’s fuel demand continues to recover in June, up 11 per cent over May