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Cotton value chain welcomes CCI cotton supply scheme
28
Dec '16
The cotton industry of India has welcomed Union textiles minister Smriti Irani’s decision to implement the Cotton Corporation of India (CCI) cotton supply scheme, a unique initiative on cotton. The minister approved the scheme that directs CCI to procure cotton on a commercial basis and supply to the mills as opposed to procuring only when prices crash.

The CCI has now announced unique terms and conditions to benefit the MSME textile units. This decision has come after the Southern India Mills’ Association (SIMA) and 25 other textile associations of India representing the entire textile value chain submitted a memorandum to Irani under the leadership of Vanathi Srinivasan, state general secretary, BJP, Tamil Nadu. They demanded cotton fibre security by implementing CCI cotton supply scheme that benefits both farmers and the industry.

In a joint letter sent to the textiles minister by the 26 textile associations, the industry has thanked her for announcing the unique scheme.

On behalf of the industry, M Senthilkumar, chairman of SIMA, stated that the new terms and conditions of fully pressed bales of CCI facilitates the registered MSME textile units to procure cotton by paying only 10 per cent deposit money as against 20 per cent, which is applicable only for the sale quantity of 30,000 bales and above.

He stated that the deposit money up to 2,999 bales is only 15 per cent and this would greatly help the MSME units that are starving for working capital fund in the post-demonetisation regime.

The predominantly cotton based Indian textile industry has been facing repeated recessions since 2008 due to high volatility in cotton prices. This was caused by the large traders and multinational cotton traders taking advantage of hedging facility and cheaper funds, while the mills could not build adequate inventory and have been paying higher price for the cotton during the off season.

More than 75 per cent of the cotton arrives in the market during December to March and around Rs 60,000 crore is required to procure the seed cotton during this period. Since the ginning and spinning mills do not have such funds, the farmers invariably get lower price.

“Earlier there was a difference in the free period ranging from 30 to 75 days and 75 days free period was available for the procurement of 15,000 bales and above and therefore, the MSME textile units could not derive much benefit out of CCI. Now the free period has been made uniform and fixed at 45 days, which would again help the actual users and the MSME units,” said Senthilkumar. (KD)

Click here for terms and conditions of CCI commercial operations.

Fibre2Fashion News Desk – India


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