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The Textiles Ministry has given the green signal to the Cotton Corporation of India to release the entire stock of 14 lakh bales (170 kg each) of cotton in the domestic market as the prevailing prices are high enough to ensure that it would not suffer any more losses.
The CCI will sell the stock in tranches at the prevailing market rates. Currently, Shankar-6, mainly in demand for exports, is ruling at Rs 42,500 for a candy of 356 kg.
Kavuru Sambasiva Rao, Minister for Textiles, told Business Line that Cotton Corporation has already been asked to offload the stocks it holds in the domestic market. “The stock will not be released all at the same time as it will affect prices. Every day, CCI would be releasing about 30,000-40,000 (bales). It is all being done in a transparent manner,” said Rao.
The Cotton Corporation had built the stocks by buying some 22.65 lakh bales from the open market as part of the Government’s market intervention operation after prices dropped below the minimum support level. It has sold 14 lakh bales in the domestic market when prices were ruling lower than the MSP, leading to losses.
Prices of cotton had fallen to Rs 34,000 a candy in February, when the Corporation stepped in and bought cotton from farmers at the support price level of Rs 39,000 a candy. The sale of nearly 7-8 lakh bales has resulted in an approximate loss of Rs 719 crore.
Although there was pressure on the Government from the textile industry to direct the corporation to off-load the remaining stock earlier, the Textile Ministry held on, waiting for domestic prices to rise. In a representation apex textiles body Confederation of Indian Textiles Industry in March had said that cotton prices had increased about 15 per cent in the last few weeks and the Corporation should dispose of its stocks to curb the price rise.
“By selling the rest of the stock at a higher price of Rs 42,500 a candy, the corporation can recover some of its earlier losses,” the Minister said.
Asked if Cotton Corporation has exported any of the surplus stock, he said, “No exports have taken place from the surplus stocks.”
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