Ginners & weavers upset over hike in cotton prices

03 Apr '08

2 min read

Government is expected to revise the prices of fibre producing crops, especially, cotton and measures for the same are on the way after complaints made by traders about speculative hoarding and large scale exports.

Although, the finance ministry is in favor of a 5 percent export tax on cotton, the Cabinet Committee on Prices (CCP) has kept the decision on hold for a while.

Being the cheapest available in the international market, Indian cotton has a huge demand overseas.

Some of the largest cotton trading companies in the world, seeking to take advantage of the situation have become active in the Indian market.

Despite a record high production in 2007-08, local prices for cotton remains not only high, but on the contrary it continues to escalate due to enormous demand from exporters.

The key problem for the Indian market is that even though farmers are benefiting by this trend, ginners and weaving mills find it difficult to make purchases at such unreasonably high prices.

However, the CCP, considering that there is still a surplus in the domestic market, has opposed the imposition of export restriction by the Finance Ministry.

On the other hand, the Cotton Association of India (CAI) strongly holds that large international players with access to foreign cash are trying to create instability in the Indian cotton market.

Moreover, market operators having finance at international interest rates are clocking the supply of cotton raw material at various levels to benefit from the trend of rising prices.

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