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Textile industry will sink with increase in MSP for cotton
Aug '08
The proposed announcement of the Central Government raising the minimum support price (MSP) for medium staple cotton from Rs.1800/- to Rs.2500/- per quintal and from Rs.2030/- to Rs.3000/- per quintal for long staple cotton results in 38% and 47% increase respectively would totally erode the competitiveness and survival of the textile industry, said Dr K V Srinivasan, Chairman, The Southern India Mills' Association (SIMA).

Dr Srinivasan said that the textile industry has been engulfed with various problems like increase in cotton prices, doubling of bank interest rates, power shortage to the tune of 25 to 40% and was hoping for revival from the recession during the next cotton season.

Against this backdrop, the proposed hike in MSP for cotton has come as a rude shock to the predominantly cotton based textile industry.

He said that the industry has been pushed from all corners and running the industry in the present scenario is difficult and if the problem is not address in its right perspective, it may result in closure of textile units throwing several million people out of employment.

He further said that the textile mills in the country have already incurred heavy cash losses during the last financial year and it is likely to worsen further in the current fiscal also. He specifically mentioned that the loss with respect to mills in Tamil Nadu was mainly attributed to the severe power shortage

Dr K V Srinivasan pointed out that the proposed hike in MSP seems to be attractive for the farmers in the short run, but it would seriously affect the farmers in the long run due to drop in consumption of cotton in the domestic market.

SIMA Chief has appealed to the Central Government to reconsider the proposed hike and revise MSP suitably for the survival of both the farmers and the end user textile industry so that parity is ensured in the input cost with competing countries.

Southern India Mills' Association

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