According to P. D. Patodia, Chairman of Confederation of Indian Textile Industry, "The textile and clothing industry is gong through a serious crisis because spiralling increase in cotton prices and unabated increase in prices of cotton, will be deleterious to the economy in general and the textile sector in particular, which has already eroded its exports competitiveness on account of appreciating rupee. The serious of onslaughts being faced by the industry will cripple its growth and employment generation potential."

Recently, CITI had organized a press meet to highlight the plight of Indian textile mills, in which I also participated. It was addressed by a number of functionaries as also office bearers of South India Mills Association. It was pointed out that some of the mills have already closed down while others are on their way to closure. It is understood that the steep rise in cotton prices has brought 20 mills to closure in the last six months. These bills, which boasted of a capacity of 25,000 spindles and above, had more than 20,000 employees, who have been rendered jobless. These mills included Ashok Textiles, Chakola Spindles, Western India Cotton Mills, Vanaja Textiles, Sri Bhagavathi Textiles, Rajgopal Textiles as well as Madras Spinners.

Why have we reached the crisis level?

There are a number of factors at work. These are primarily the short availability of cotton, high interest cost, and above all, the unbridled cotton trading by international players.

Short Availability of Cotton

If one were to ask the Government today as to what is level of actual exports of cotton or their country-wise details or what quantity and/or value worth of export contracts have been signed or committed, it will be difficult for the Government to give any figures, not to speak of official, authoritative figures. At best, the Government can possibly give out some "estimates".

There is an apparent short availability of cotton in the market today. It might generally be presumed that it is because of lower productivity levels of Indian cotton production or lower overall production of cotton in the country. It is true that all-India per hectare yield is estimated at 553 kgs. Per hectare for 2007-09, which is a positive improvement over 520 kgs. per hectare in a year before. Yet it is much lower than the world average of 765 kgs. per hectare. In spite of our having the highest total area under cotton cultivation in the world, we are still number two in our total production.

However, in term of actual production of cotton, we are not that badly placed. In fact, this year we expect a total crop of 315 lakh bales (each of 170 kgs. each), which was only 244 lakh bales in 2005-06 and 270 lakh bales in 2006-07. Of course, the industry needs some 278 lakh bales, which should have been more than enough for the industry to meet its requirement. The chart below traces the progress of cotton economy: