The Indian textile industry should not expect the Cotton Corporation of India (CCI) to sell cotton at a loss just because it is a government enterprise, according to CCI chairman P Alii Rani, who recently said the corporation has so far bought a quarter of the cotton that has arrived in the markets this year since the beginning of the cotton year on October 1.
The remark followed after South Indian Mills Association (SIMA) urged textile minister Smriti Irani to instruct CCI to sell cotton at market price so that spinning mills can procure it at a competitive rate. Mill owners have complained that the price of ₹46,000 per candy (of 356 kg each) quoted by the CCI is too high, according to a report in a top business daily.
The ruling market price is that of second-grade cotton, and that cannot be compared with CCI's best quality cotton, Rani said, referring to the market price of ₹40,000 per candy.
Rani said it is unfair for the industry to expect that the best quality cotton should become available to them at the price of the second-grade cotton and lead to a burden on the taxpayers.
However, SIMA chairman Ashwin Chandran alleged that CCI’s trading policy often aggravates a bad market condition, a charge denied by CCI, which has been auctioning cotton on a daily basis. The industry has come together and decided not to participate in CCI’s tendering process as they do not want to pay the price that CCI has set, said Rani.
According to her, the small and cooperative mills have been buying from CCI, but the big mills have not been participating in CCI’s tenders. CCI could sell only 200,000 bales of the 1.1 million bales it had procured in the previous cotton year.
This year, it has so far procured 3.8 million bales of 170 kg each from markets, where the prices were ruling below the minimum support price (MSP). CCI has not conducted any commercial operations this year and has restricted to only MSP operations.
Mill operators are of the view that if exports continue to increase, it can create a panic-like situation in the domestic market.
Ashwin said over 20 lakh bales of cotton have already been exported from the current cotton crop and export might reach the level of 60 lakh bales, as against 50 lakh bales estimated by the Cotton Advisory Board. If the trend continues, it may result in panic situation in the Indian cotton market, he added.
Fibre2Fashion News Desk (DS)