NFP needs to address cotton stock-to-use ratio – Mr Jain, TT Ltd

17 Jul '10

6 min read

5) It was seen that India's cotton advantage was being enjoyed by global mills from neighbouring countries. Landed cost of Shankar 6 cotton was higher for South Indian mills (50% mills are located here) as against mills from Pakistan/Thailand/Indonesia as sea freight rates were very low compared to internal transportation. This is a big issue as our competitiveness of raw material is being exported and the results are already in front of us - Vietnam and Bangladesh apparel exports are equal or higher than Indian exports despite the fact that they don't have any cotton fibre. The freight cost of 25MT of cotton from Mumbai to Shanghai is a mere US $25 or Rs 1,200 for 25MT of cotton. The cost of the same to South India by road is about Rs 75,000. Pakistan can get cotton from Punjab via Wagah border at a very low cost compared to the same cotton being transported to South India from Punjab. Such issues have not been even dwelt upon in the policy.

6) The Fibre Policy has laid down an unrealistic cotton crop target of 48.3 million bales by 2019-20. They have adopted a simple linear growth rate model which cannot be applicable in case of cotton whose crop size varies year on year due to factors like monsoons, realization from other competing crops etc. If we see the data after the BT Revolution in 2003-5, the Indian crop size on the average hasn't grown. It is range bound for the last 4 - 5 years. No major technology revolution is on the cards and area under cotton is at an all time high, hence to expect such a high growth year after year is asking for a bit too much. We cannot take the last 10 year growth and extrapolate, as there was a major technological revolution by way of introduction of BT seeds which resulted in a big jump in crop size over a short span.

7) India's cotton has been acknowledged as being one of the best except for a man-made problem; “Contamination”. This single factor is resulting in 5% lower realisation for our cotton. This issue has not been specifically addressed in the fibre policy despite its importance in terms of value for the farmer/trade. Better Systems and control can alone fetch 5-10% higher prices. Unfortunately, it still has not been found to be so important.

8) I am not commenting on the issues relating to non-fibre matters like yarn, TUF etc though there are major issues on that front also. As they were not within the scope of the Policy, hence the proper players were not present in the working groups to discuss the same. They should be made part of a separate Textile Policy. However, I want to re-emphasis that a Fiber Policy should clearly mention what is the stock to use ratio we shall maintain and what would be the export policy in terms of volumes and export duty that would be followed for cotton fibre.

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