Textile leaders submit Seven Point Action Frame to Govt

14 Sep '10

5 min read

The unprecedented cotton crisis, triggered by the runaway prices and vaulted demand for exports, will fritter away the textile advantage of India, according to Indian textile industry leaders.

At a press conference held in Delhi under joint auspices of the textile and clothing associations of India, they called upon the government to design policies on a durable basis for the survival of the entire textile and clothing industry and to lend a measure of support to its exports.

“We would request that the government policies may be designed to ensure that the benefits of Indian cotton are available to the domestic textile industry, rather than to industries of China, Pakistan and Bangladesh, which otherwise would be competing with us in the global textile and clothing markets on the strength of the Indian cotton,” industry leaders have lamented in a joint letter, which they have addressed to the Prime Minister, Finance Minister, Commerce Minister, Textile Minister and high ranking officials.

Mr. Shishir Jaipuria, Chairman, Confederation of Indian Textile Industry (CITI) said that despite the bumper crop of 295 lakh bales during cotton year 2009-10 (October –December), Shanker-6, which is the standard cotton, is being sold at Rs 38,000 per candy (355kgs) as against Rs 23,000 per candy in the beginning of the year.

“The unfortunate part is that even at this price, which is roughly 50 per cent higher than the Minimum Support Price (MSP), cotton is scarcely available,” and added “at this price, textile mills cannot run viably and most mills are likely to incur losses, which will force them to default on repayment of huge loans they have taken under Technology Upgradation Fund Scheme (TUFS).

Mentioning that the cotton farmers have not much benefited from the current price rise, Mr S.V. Arumugam, Deputy Chairman, CITI said that a substantial portion of the price increase has been after most of the cotton reached the hands of traders. Procurement of cotton by the traders are mostly for export purposes.

“Export of over 83 lakh bales, a whopping 30 percent of the total production, is the crux of the problem that has upset the apple cart. The government announcement of cotton exports being removed from the restricted list resulted in an increase of around Rs.6000 a candy within a few weeks, “ he added.

Mr. A. Sakthivel, President, Federation of Indian Exporters Organisation (FIEO) observed that the announcement that the cotton exports during 2010-11 will be restricted to exportable surplus was a realization of the seriousness of the situation but maintained that it fell short of the requirement and expectations of the textile community.

“Surprisingly, there have not been any measures to ensure that actual exports of cotton get restricted to exportable surplus. Export policy of cotton has been changed from restricted to free earlier this year and the stipulation of license for exportshas also been withdrawn. Thus, the Department of Commerce cannot put any restrictions on cotton exports under the current policy,” he added. Moreover, the Textile Commissioner has notified guidelines for registration of contracts for export of cotton during 2010-11, but they do not have any provision for discontinuation of registration once the exportable surplus is registered.

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