The textile sector is pleading with the Prime Minister to intervene in order to keep cotton prices stable
01 January 2022, Mumbai:
The Confederation of Indian Textile Industry (CITI) has asked Prime Minister Narendra Modi to intervene in order to stabilise cotton prices, which have risen to their highest level in 11 cotton seasons.
It has also called for the establishment of a cotton price stabilisation fund, which would include a 5% interest subsidy or a loan at the NABARD rate of interest, a reduction in margin money from 25% to 10%, and an increase in the cotton working capital limit from 3 to 9 months.
In a letter to the Prime Minister, T Rajkumar, chairman of CITI, stated that the Indian cotton textile industry has always been in the forefront of affairs due to its inherent strength of abundant raw cotton at competitive rates and the presence of the full cotton value chain.
The Indian Textile Industry employs nearly 10 crore people, ranging from highly qualified workers in technical textile factories to illiterate women and destitute farmers, thanks to this inherent strength. labouring in cotton agricultural areas and modest clothing manufacturers.
The textile and cotton industries have faced numerous obstacles in the previous 10 years, according to the CITI chairman, due to variations in raw cotton prices, which account for 60% of the yarn's cost.
This puts the downstream business, particularly the spinning industry, at risk since it raises yarn prices and makes them unpredictable in the very cost-competitive international market.
He went on to say that cotton's removal from the Essential Commodities Act has exacerbated the industry's problems by allowing foreign cotton traders/hoarders to dominate the Indian cotton business.
They buy cotton in bulk at lower costs during peak season, export it to create shortages, and then speculate on the prices during the off-season. Cotton prices have been rising often, and the Cotton Corporation of India Ltd (CCI).
(CCI) has been unloading large supplies at attractive discounts, fueling cotton price speculation. This causes havoc in the downstream parts, putting pressure on the government to stabilize yarn prices, which will not be achievable until and unless raw cotton prices stabilize.
Rajkumar claims that his appeal will assist MSME spinning mills in obtaining cotton during the peak season (November to March), as well as help farmers obtain higher rates and avoid the MSP.
This would also allow the cotton value chain to develop by 2-3 percent, bringing in several thousands of crores in additional revenue when compared to the current financial commitment of roughly Rs.1000 crores per year.
They also assist in reducing the amount of money spent by the government on MSP operations throughout the course of the year.
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