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CITI protests against unreasonable increase in MSPs for cotton
05
Sep '08
Confederation of Indian Textile Industry has expressed shock and dismay at the unreasonable increase announced by Central Government in the Minimum Support Prices (MSPs) for cotton for 2008-09.

In a statement here, Shri P.D. Patodia, Chairman, CITI has pointed out that the Textile Industry in India is in the throes of a crisis in the context of rapidly declining demand in western markets and simultaneous supply side problems arising from increased raw material prices & higher input costs.

In this context, the increase of over 40% announced in Minimum Support Prices for cotton for cotton year 2008-09 has come as a rude shock to the industry. Currently domestic cotton prices are already 15% higher than international prices, he added

The increase in MSPs would trigger another price spiral which the industry will not be able to afford or absorb. Shri Patodia pointed out that the MSP had been increased by 47% from Rs.2030 a quintal last year to Rs.3000 a quintal this year, for the standard variety of long staple cotton.

Shri Patodia stated that government should take cognizance of the interdependency of the textile industry and cotton farmers as an effective chain so as to ensure that the decisions meant to help cotton farmers do not end up in reducing cotton consumption and thus hurting the long-term interests of cotton farmers.

MSP operation has its own attendant problems of size and speed of process since it has to handle an avalanche of cotton arrivals, which can go up to 2 lakh to 2.5 lakh bales per day. In two months Nov/ Dec total arrival can go up to 1.50 to 1.75 crore bales and the quality of cotton has to be maintained to make it marketable and usable.

Shri Patodia felt that government will be forced to procure huge quantities, since the mills will not be able to purchase cotton at the increased prices, and the procured cotton will have to be disposed of at huge loss to the exchequer.

“We are fully aware that remunerative prices and reasonable income of cotton farmers on a regular basis is in the enlightened self interest of the industry. But such a steep increase in MSP at this juncture will only hurt the long-term interests of both the industry and the farmers and we would therefore request and plead that the MSPs may be revised downward with an increase of not more than 10% from those applied during 2007-08”, Shri Patodia stated.

Confederation of Indian Textile Industry

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