Textile spinners' body urges for cotton security

09 Sep '11

2 min read

A textile spinners' body has urged the Union Government to allow exports of cotton only after the requirements of the local textile mills are met.

The South India Spinners Association said that the Government's decision to allow export of 5.5 million bales of cotton, which was taken even before the arrival of the new cotton crop last year, resulted in a sharp rise in cotton price, which escalated from Rs. 30,000 to Rs. 65,000 per candy. However, the prices have now plummeted to Rs. 35,000 a candy.

As a result, the Association said, textile mills have suffered heavy losses and are finding it difficult to pay back their loans. Hence, they should be given a moratorium period of two years, the Association demanded.

Further, the textile mills should be offered loans for cotton purchases at the same rate at which agricultural loans are offered, i.e. at the rate of seven percent, as the textile millers buy cotton, which is an agricultural product, the Association stated.

The rate of margin money deposit should also be brought down from the existing 25 percent to 10 percent, it added.

It suggested that the banks should reduce the interest rates on long-term loans for purchase of machinery from the current 15.75 percent to 10 percent.

The obligation for hank yarn should also be reduced from 40 percent to 15 percent and the obligation should be steadily written off, the spinners' body said.

Moreover, the Association said that the Cotton Corporation of India should function in such a manner that both cotton cultivators and textile production units are benefited.

Fibre2fashion News Desk - India

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