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High cotton prices – joy for farmers, sorrow for textile sector
Dec '10
Though high prices of cotton had created adequate troubles for the $62 billion worth textile industry of India, but the same has helped the cotton cultivators and traders to reap gains in 2010.

A group of Ministers led by Finance Minister Pranab Mukherjee monitored the crop status and the prices, under tremendous pressure from the conflicting interest groups, as the untimely winter rains proved to be a wet blanket.

In the meantime, the textile sector has been appealing the Textiles, Commerce and Finance Ministries to restrict cotton exports.

The Ministries jointly worked out a mutually agreeable solution of putting a ceiling of 5.5 million bales on cotton exports.

The cotton prices soared in the global market due to the demand-supply gap which was mainly attributable to the rising demand from China and low production in Pakistan due to heavy rains.

Cotton that serves as a basic input for 60 percent of the textile industry employing around 35 million persons has been in short supply since the very beginning of current financial year, but the major surge of around 90 percent in the commodity price was witnessed only during the past five months only. As revealed by the industry sources, cotton was traded at a record high price of Rs 45,000 per candy (356 kg each) in the local markets, during October.

Though the government interfered in the matter and restricted cotton exports at 5.5 million bales and cotton yarn exports at 720 million kg, but this did not help in easing the soaring prices.

The soaring prices caused the garment manufacturers and the exporters to suffer the most amongst all the stakeholders of the industry, while the overall trend found support in current year's revival in global demand in 2010, after a difficult year of 2009.

However, the garment exporters who had shipped around 50 percent of the country's overall textile exports, continued to experience the shortfall in demand.

Apparel exports, during April to July period this year, stood at $5.75 billion, thus indicating a year-on-year fall of six percent. However, things have started getting better since August, 2010.

According to the Textile Ministry's estimations that came in the month of October this year, the overall cotton production for 2010-11 fiscal is expected to come to around 32.5 million bales.

Fibre2fashion News Desk - India

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