Egyptian shippers demand higher cotton contract price

19 Dec '05

2 min read

Several textile companies like GTN, Prime, Premier and Super Spinning, who signed contracts worth Rs300 crore with the Egyptian public sector shippers, are now at risk of losing them.

Shippers for extra long staple cotton are insisting for the rise in the contract prices as global cotton prices soared up by 25–30 percent in past few weeks.

The contracts are in danger of being rendered invalid, lest they are not renewed with higher prices.

Indian companies argue that the buyers of yarn and fabrics would have to be compensated as the prices were settled under the existing contract.

Two sides are slugging it out as the shippers claim that the weather has affected the crop, while the companies brushed off this argument saying that the only reason was hike in cotton prices.

According to Indian textile players, the Egyptian shippers were violating the contract by trying to force this proposal.

Companies based in textile hubs Coimbatore and Ludhiana which make high count yarn, import extra long staple cotton mainly from the US and the EU.

Egyptian Giza cotton imports by these yarn manufacturers are worth about 2lakh bales per year.

India has been the largest importer Egyptian cotton for the last few years.

Different opportunities for cotton imports have opened up after the expiry of textile quotas.

Confederation of Indian Textile Industry (CITI) opined the proposal is fraught with far reaching repercussions, and hence should be dropped.

Various cotton organizations in the world including the International Cotton Advisory Committee, Washington, have been dwelling on maintaining the sanctity of contracts.

Thus, unilateral abrogation of contracts by Egyptian shippers would undoubtedly be considered unfair trade practice.

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