Amid spiralling cotton prices, value-chain participants, including textile players, have sought the government’s intervention by making stock disclosures mandatory, allowing duty-free imports and taking measures to contain speculation.
The Confederation of Indian Textile Industry (CITI), the Southern India Mills’ Association (SIMA) and Tirupur Exporters’ Association (TEA) have pointed to a grave situation being faced by the entire cotton textile value chain across the country following record high prices of the natural fibre.
Cotton prices have increased from ₹44,500 per candy (of 356 kg) in February 2021 to ₹90,000 per candy now. Notably, the government had levied the 11 per cent import duty on cotton when prices were nearly half of what they are now. "The steep increase in cotton price and its impact on prices of yarns and fabrics is severely impacting the potential growth of the cotton textile value chain," said industry participants in a joint statement issued on Tuesday.
Challenges due to war
The industry also underlined the challenging situations being faced by the trade in the backdrop of the ongoing Ukraine-Russia war which has caused a steep increase in oil prices by 30-40 per cent impacting the European economy and ultimately hurting the demand for Indian exports.
In this backdrop, the representatives of SIMA, TEA and CITI have urged the Government to announce duty-free import of 40 lakh bales immediately to stabilize cotton priceS and create a level-playing field for the textile industry. This is to make them sustain export performance, financial viability and livelihoods of over 30 million people directly employed in the cotton textile value chain, a joint statement issued by the three bodies said.
Notably, it is also appealed to the Government to impose a mandatory declaration of cotton stock with all the stakeholders. This is aimed at curbing hoarding and speculation in the cotton trade. They have urged revamping the cotton trade under commodity exchanges MCX and NCDEX.
Earlier this week, textiles industry apex body CITI had convened a stakeholders' meeting on Cotton Availability and Price issues. As per the meeting outcome, it was agreed that the cotton stocks are held by speculators currently who are expecting a higher price from the current levels.
The trade bodies have also highlighted that the spinning mills were left with cotton stock of only 40 days or (41 lakh bales each of 170 kg) as against three to six months’ stock during any cotton season at the end of March. Since more than 90 per cent of the cotton crop is said to have arrived into the market during the months of December and March, industry players are suspecting a lack of clarity on the data. "Currently, approximately 240 lakh bales of cotton has arrived into the market as against 320 lakh bales that should have arrived by this time," the industry players said pointing out that 11 per cent import duty has emboldened the traders to hoard cotton in the name of farmers, adopt import parity pricing policy and curtail the global competitiveness of the Indian textile industry.