The Government has hiked the minimum support price (MSP) of cotton by 18-29 per cent and has formed a contingency plan to procure 90 lakh bales for the 2012-13 season.
The MSP for medium staple cotton has been hiked by 29 per cent to Rs 3,600 a quintal from Rs 2,800.
For long staple cotton, the support price has been increased by 18 per cent to Rs 3,900 from Rs 3,300 for the 2012-13 season that began in October, a Textile Ministry statement said.
The Government expects to open 288 procurement centres in nine cotton growing States.
The Cotton Corporation of India has already raised its working capital requirement up to Rs 15,000 crore for MSP operations.
Commerce, Industry and Textiles Minister Anand Sharma held a review meeting for early commencement of MSP operations to stabilise cotton prices, which have witnessed a sharp decline and are hovering around the MSP levels.
Domestic prices have dropped to MSP levels in Andhra Pradesh and are hovering around those levels in Maharashtra, Punjab, Rajasthan and Madhya Pradesh.
Production estimate
The Cotton Advisory Board has estimated cotton production in the country at 334 lakh bales, while consumption is pegged at 260 lakh bales.
The exportable surplus is estimated at 70 lakh bales. Although domestic consumption is showing trends of increasing, the sharp decline in global trade and increase in world stocks have dragged cotton prices that is reflected in the domestic markets also, the statement said.
The distribution of cotton procurement centres has been firmed up in consultation with State Governments.
The Cotton Corporation of India will operate 20 procurement centres in Punjab, 14 in Haryana, 28 in Rajasthan, 47 in Gujarat, 55 in Maharashtra, 17 in Andhra Pradesh, 13 in Karnataka and seven in Orissa.
The criteria for selection of a procurement centre include expected arrivals of 50,000 quintals, existence of a functional market yard, availability of a weighbridge in the market yard, availability of ginning and pressing factories and availability of fire fighting facilities.
Three procurement centres have already commenced operations in Andhra Pradesh, the statement said.