Pricing policy is required to keep cotton prices on par with international prices

The Cotton Textiles Export Promotion Council, known as TEXPROCIL, has been the international face of cotton textiles from India facilitating exports worldwide. The Council connects international buyers with appropriate suppliers and facilitates interaction that enables them to source their specific needs.

Siddhartha Rajagopal, Executive Director, Texprocil, provides some wish-list for the industry and the Government in boosting cotton consumption in India.

Excerpts…

With the cotton price hardening, what are the industry?s concerns in the medium and long term?

The hardening of the cotton prices in the last few weeks is a matter of concern to the textile industry where cotton is the main raw material.

The rise in prices has affected many textile mills especially those that do not have stock of the raw material. Due to this situation imports are likely to be more than the estimates as international cotton prices are lower than the Indian prices. Higher cotton prices hit production of cotton-based goods with a final impact on export of cotton-based textile goods.

The Council has always been making repeated representations to the Government that cotton prices should always be available at par with international prices or lower. Such a move will ensure a regular supply of the raw material thereby addressing the concerns of the textile mills.

What is the scene on production of cotton this year and how do you think it will affect the growth of the industry in the future?

Cotton is one of the principal crops of India and plays a vital role in the country?s economic growth by providing substantial employment and making significant contributions to export earnings.

India is the largest producer of cotton in the world.

In 2015-16, the estimated production of cotton in India?as per the recent Cotton Advisory Board meeting held on July 13?was about 338 lakh bales of 170 kg each. The cotton crop in India was affected because of the whitefly attacks in the northern belt due to which the estimates were revised downwards to 338 lakh bales.

One of the main requirement of the textile mills in India is that a close-to-accurate forecast should be available on cotton crop for the year. This helps the mills and other SMEs to plan their output without any change in the production schedules.

India is able to cater to its domestic demand of cotton as well as exports provided there is no cause for importing the raw material. If cotton is made available at international prices or lower then cotton based mills will have a guaranteed supply of the raw material thus aiding the growth of the industry.

Are there investments happening in cotton? What are the future trends?

Indian cotton textile industry is one of the oldest and largest in the country. Within the cotton textile value chain, cotton ginning is a significant process as it is an interface between the farming and mill sectors. Ginning along with pressing is an important element in providing the final cotton to mills.

With India now leading the world in cotton production there are investments also being made in this sector However, there is a need to modernise this sector and make it more competitive by producing cotton of international quality. Automation is the key to improving productivity of the gins and future investments need to be made to automate the process of ginning.

What is your wish-list for the industry and the Government in boosting cotton consumption in India?

During the last 10-15 years, there has been a phenomenal growth in the textile sector in terms of installed spindleage capacity and yarn production.

The growth and modernisation of the spinning industry has led to a substantial growth in cotton consumption.

To boost cotton consumption in India, the first need is to have a pricing policy that keeps the cotton prices on par with international prices. Beside encouraging domestic off-take, such policies will also limit and restrict the import of cotton.

Another option is to go in for a sizeable price support operation in times of huge fluctuations in the event that there is an imbalance in cotton trade, both in imports as well as in supply.

A third alternative is to look at additional support programmes like the 5 per cent interest subvention during peak buying season from October to April.

What is the export scenario for Indian cotton mills, and what are the effects of global cotton production affecting it?

In the last fiscal year of 2015-16, cotton production was an estimated 338 lakh bales of 170 kg each. The total supply of cotton was about 419 lakh bales including the opening stock of 66 lakh bales and imports of 15 lakh bales. Consumption of cotton was estimated at 308 lakh bales and cotton exports in 2015-16 was approximately 68 lakh bales.

Exports of cotton from India have reduced from a level of over 100 lakh bales in 2013-14 to a level of 55-70 lakh bales in 2014-15 and 2015-16. The exports will gain momentum once the Chinese policy on cotton supply stabilises. One of the factors that affect global cotton trade is the Chinese policy on cotton. China imports as well as exports a huge quantity of cotton but this year the decision was to offload its reserve stocks of cotton in the domestic market. This created a huge gap in the import requirement of raw material into China thereby causing a dip in the exports of other cotton producing countries like India.

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