CITI stresses need for proper perspective

19 Jan '11

5 min read

The textile industry and the cotton economy of the country have been victims of irrational government policies during recent years, according to Shri Shishir Jaipuria, Chairman of Confederation of Indian Textile Industry (CITI).

In a statement issued here he observed that productivity of cotton have been increasing but policies have been hampering the efforts of the industry to convert cotton growth to textile growth and thereby create job opportunities for lakhs of rural workers.

Referring to the scenario in the current cotton year, CITI Chairman stated that the crop has been estimated by Cotton Advisory Board at 329 lakh bales, though the industry believes that it will be much lower. While governments in major cotton producing states like Gujarat and Andhra Pradesh have been highlighting the huge damage caused to cotton crop by weather, the Agriculture Ministry at the centre continues to over-estimate the crop in order to allow more exports. Already, exports have been permitted beyond the quantity of 55 lakh bales decided by government. When the crop was 290 lakh bales and monthly consumption by domestic mills was around 20 lakh bales,government had decided that the minimum ending stock to sustain proper availability of cotton to mills would be 50 lakh bales. The crop size has increased and the monthly domestic consumption has grown by over 20 percent subsequently, but the ending stock has now come down to 44.5 lakh bales because of exports, according to CAB data.

Shri Jaipuria stated that in the previous two years also policies on cotton had hampered growth of textile industry. “Government announced 5 percent incentives on cotton exports in February 2009, effective retrospectively from April 2008. This could obviously help only traders make undue profits”, he said. Referring to 2009-10, Shri Jaipuria pointed out that over 73 lakh bales of cotton had already been shipped out before government agreed to restrict exports in April 2010. But in August-September, another 10 lakh bales were allowed for exports, resulting in a price increase of over rupees ten thousand per candy in the domestic market. Shri Jaipuria stressed that the entire additional income went to traders, since the farmers had already sold the crop in full.

Shri Jaipuria added that periodic statements coming from different sources in government on the possibility of further exports of cotton have been pushing up cotton prices in recent weeks. “Cotton prices increased by Rs.4000 per candy during the last one week, while cotton yarn prices continue to decline and demand for cotton yarn dwindling. Shankar-6 cotton is currently selling at Rs.46000 a candy”, he said, adding that such sudden increase in prices mostly benefited traders. Shri Jaipuria wanted government to commission a study on the prices realized by farmers and the profits earned by traders from cotton during the last two years which will bring out the undue advantages that cotton traders have been drawing from the uncertainties that government policies and announcements create.

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