The Cotton Corporation of India, Ministry of Textiles established in the year 1974 has been exercising commercial cotton operations and cotton minimum support price operations to protect the interests of the cotton farmers and the predominantly cotton based textile industry. CCI had to exercise MSP operations during the start of the 2018-19 season and also during the current cotton season due to the fall in market prices, sluggish market conditions globally and considerable increase in the domestic crop output. CCI could not sell the cotton procured in the 2018-19 season to the tune of nine lakh bales due to drop in prices. During the current season, CCI has procured over 60 lakh bales of cotton under MSP, the cost of which is much higher than the market price. Hence, CCI has been quoting higher prices than the market price and practically there was no off-take except the mandatory purchases by the public sector spinning mills. The cotton industry has been pleading with the Ministry of Textiles to sell the cotton at market prices to have stability in the cotton market and protect the interests of the spinning mills and its downstream power loom and handloom sectors.
Ashwin Chandran, Chairman, The Southern India Mills Association has thanked the Union Textile Minister Smriti Zubin Irani for the intervention, enabling CCI to offer volume based bulk discounts for its 2018-19 cotton and protecting the interests of MSME spinning mills by offering the discounts from 500 bales and restricting the same at 10,000 bales. The discount ranges from Rs 3,200 to Rs 4,400 per candy of 355 kg and CCI has quoted Rs 46,400 per candy for 30 mm cotton of fair average quality while the current market price is around Rs 40,500.
SIMA Chairman has stated that considering the free lifting period and quality claimed by CCI for its cotton, the prices would come closer to the market prices and mills might commence procurement from CCI. Ashwin hopes that CCI would soon offer its current year MSP cotton at market prices at constant intervals till season end and facilitate stability in cotton prices.
Ashwin stated that CCI had earlier offered attractive bulk discounts and free period up to 120 days facilitating multinational cotton traders to garner the cotton and speculate the prices during off-season. He has appreciated the bold decision of the present Union Textile Minister to abolish such discounts during 2017 to stabilise the cotton prices, protect the interests of the actual users of cotton especially the MSME spinning segment and its downstream sectors.
SIMA Chief has appealed to the Government to include cotton yarn under various export benefits such as IES (interest subvention) and RoSCTL/RoDTEP (refund of embedded/blocked taxes and levies), to make Indian cotton yarn which attracts considerable tariff in all the export markets, globally competitive and thereby boost exports. Cotton yarn export from India has dropped around 30 percent during the year 2019-20 when compared to the previous year. Ashwin stated that increased yarn exports will stimulate demand for cotton which in turn would also help the Government to reduce the losses on account of MSP as CCI is on track to procure up to 100 lakh bales of cotton during the current cotton season.