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Volatile cotton prices worry Indian spinners
Feb '14
The predominantly cotton based Indian textile industry, particularly Tamil Nadu textile industry which accounts for 47.5% of the spinning capacity, has been facing several challenges during the last five years on raw material front, export-import policies, power shortage, labour shortage, steep increase in diesel prices, increase in lorry freight, increase in labour cost etc.  
This has made the investments stagnant in the spinning sector during the last five years. However, Union Budget 2013-14 and Annual Supplement to Foreign Trade Policy 2013-14 addressed many issues and the power position has also improved in Tamil Nadu.
Simultaneously, the government also announced the Restructured Revised Technology Upgradation Fund Scheme (RR-TUFS) in September 2013.  The demand for yarn, fabrics and made ups and other cotton textiles items, particularly coarser items, has increased considerably from China.  This has helped the entire Indian textile industry to perform reasonably well during the year 2013, which is likely to continue in the year 2014 also.  
However, the recent hike in cotton price is causing worries in the minds of the textile entrepreneurs about sustaining the growth rate.  However, the increase in cotton price has helped the cotton farmers as the same has increased during cotton peak season.  
Textile industry has been demanding for cotton price stabilization fund scheme consisting of 5% interest subvention, increasing the credit limit from three months to nine months and reducing the margin money from 25% to 10% to mitigate speculations and have level playing field with multinational cotton traders, who are flooded with cheaper funds and hedging facilities. 
Mr. T Rajkumar, Chairman - The Southern India Mills’ Association (SIMA) has stated that the yarn prices have been fluctuating depending upon the costs of inputs during the last two years and there is a perfect correlation between the cotton price and yarn price.  
He has stated that the cotton price (spot price per candy of 355 kgs) which was ruling at Rs.47,500/- during September 2013 slashed to Rs.39,000/- during December 2013 and now again has increased to Rs.43,000/- per candy.  Mr.Rajkumar has added that the yarn prices of 40s combed hosiery per kg for the corresponding months were ruling at Rs.260/- Rs.241/- and at Rs.256/- respectively.

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