Home / Knowledge / News / Textiles / Cotton export under OGL - SIMA demands a level playing field
Cotton export under OGL - SIMA demands a level playing field
Aug '11
The predominantly cotton based textile industry, providing direct and indirect employment to over 90 million people, is the single largest employment provider next only to agriculture, The industry has invested over Rs.2.00 lakh crore during the last decade and created new jobs for over 10 million people and fetching 17% of the foreign exchange earnings. Cotton textile industry was performing extremely well during the period between 2003 and 2007 and the investments were doubling year on year mainly due to the advantage of home grown cotton.

The price stability of cotton and cotton yarn prevailed during this period enabled the different segments of the textile industry right from cotton farmers to finished goods to have a win-win situation and assured reasonable profitability through out this period. The problem started with the removal of cotton textiles from the Essential Commodities Act from February 2008 which enabled the multinational cotton traders flooded with funds at negligible interest rate to dominate the Indian cotton economy and speculate the prices.

Taking advantage of the cotton under Open General Licence and 14% import duty on cotton, the multinational cotton traders exported over 30 lakh bales of cotton in excess than the quantity earmarked by the Cotton Advisory Board during the cotton season 2007-08 leaving a closing stock of 35 lakh bales and a stock-to-use ratio of 15%, as against the international level of 40 to 50%.

The competing countries like China, Pakistan and Bangladesh etc were able to source Indian cotton at 20% cheaper price when compared to the Indian mills owing to import duty, DEPB / drawback extended for cotton and cheaper means of transport through foreign vessel. The Indian spinning mills across the Nation for the first time in the history had to observe one day production stoppage on 9th July 2008 to make the Government to remove 14% import duty and 1% duty drawback given for cotton to bring a level playing field partially.

However, the bank interest rate which was 7.5% during the year 2007, started hardening and reached to almost 15% today. The Indian spinning mills, predominantly small and medium sized in nature, do not have direct access to imported cotton, hedging facilities, cheaper funds like ECB and also cannot handle the arbitration of Liverpool Cotton Association. The Indian spinning mills have the working capital constraints due to 25% margin money, maximum three months credit limit at 15% interest rate.

In a press release issued, Mr.J.Thulasidharan, Chairman, The Southern India Mills' Association (SIMA) has appealed to the Hon'ble Prime Minister to ensure a level playing field for the Indian cotton textile mills before taking a decision on allowing cotton export under OGL in the long run. He has stated that the Empowered Group of Ministers had promised to ensure 2 ½ months closing stock for the cotton season 2009-10 which was not implemented.

Must ReadView All

US commerce department finds dumping of low melt PSF

Textiles | On 20th Jun 2018

US commerce department finds dumping of low melt PSF

The US department of commerce (USDC) has announced affirmative final...

Courtesy: Aditya Birla

Textiles | On 20th Jun 2018

'Growth of VSF yarn industry is difficult'

Growth for the viscose filament yarn (VSF) yarn industry is...

Comfort USP of Sensitive Fabrics range of Eurojersey Spa

Apparel/Garments | On 20th Jun 2018

Comfort USP of Sensitive Fabrics range of Eurojersey Spa

Italian company Eurojersey Spa will present in 2019 new embossing...

Interviews View All

Sunil Rathore
Lacoste India

‘New vendor is welcome if he offers cost, quality and timely delivery’

Marazban F Velati
Sutlej Textiles & Industries limited

No training can be effective till the candidate believes in it.

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Sandip Bhojani, Manthan Patel

Krypthm Tradelink LLP is a Surat-based manufacturer of westernwear....

Tom Adeyoola

Describing itself as the best body shape and garment fit company in the...

Ravindra Jain, Ashish Baid

Oswal Prints Private Limited has been manufacturing and exporting ethnic...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Marcel Alberts

Coating at a fibre level is a practice not usually seen in the...

Pranav Mishra

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

June 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category

Related Categories:

Advanced Search