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MSP hike forces textile firms to increase import
Nov '08
On the back of 40 percent hike in the Minimum Support Price (MSP) for cotton, and drastic fall in the international prices, Indian textile companies have started procuring cotton from neighbouring countries as well as from Argentina, Brazil and the US among others.

Last year, in the month of November, cotton prices stood at around Rs19,700 to Rs20,000 per candy while in this fiscal, due to rise in MSP, it is Rs21,800 to Rs22,000 per candy. Thus, the present scenario, importing cotton has become a feasible option for textile manufacturers.

In this context, Mr Arun Dalal, owner of an Ahmedabad-based leading cotton trading firm Arun Dalal and Co told to Fibre2fashion, “This year, export will not be as per expected whereas import will continue to rise. Big players like Vardhman, Arvind Mills, and Rajpal & Group, are importing cotton from the international sellers.”

Mr Dalal, further reiterated, “Apart from high domestic cotton prices, Indian textile industry is burdened with several other factors like irregular power supply.

“However, we can say, Government is supporting the farmers by buying cotton from them. Cotton Corporation of India (CCI) has already procured around 0.7 million bales of cotton out of total produce of 4 million.”

While reasoning the sudden rise in the imports of cotton, Mr Ashish Shah, Managing Director, Arvee Denim, said, “Because the MSP has been increased by over 40 percent, the prices of cotton in India are not falling. There is a disparity in the prices at which the ginner is buying kapus and the price he is getting in the market. Now, with this, ginners are making losses. International cotton prices have fallen drastically and New York December future is at 40 cents hence there are no possibilities of exports of cotton from India unless the prices Indian cotton Shankar 6 variety falls below Rs19000 per candy.”

In the current year, Arvee Denim has imported around 15000 bales of cotton mostly from USA.

Discussing about the current situation, Managing Director, Arvee Denim said, “If government doesn't do anything on MSP, then ginners will not be able to run their gins and make huge losses or else CCI or Maharashtra federation will have to bear the losses.”

“Textile industry as a whole was already hurt before recession started because of high cotton prices last year, high power cost and high chemical costs, government of India must come up with some package for the industry”, opines Mr Shah.

Fibre2fashion News Desk - India

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