In order to ensure cotton supply to production needs of Indian domestic textile industry, the government owned - Cotton Corporation of India (CCI), suggested establishing around 2.5 million bales (1 bale = 170 kg) of cotton reserves.
These reserves will help meet the demand of domestic textile industry before the start of 2012/13 cotton year, said CCI.
India also decided to suspend cotton exports from March 5, as soon as China increased its support price for procurement of state reserves cotton by 600 Yuan / ton.
India also plans to purchase and store domestic cotton as reserves, following the example of China. The chain of events reflects India's intent of initiatively controlling cotton resources, say Chinese experts.
They also add that, policy trends in China and India will become important factors to decide future direction of cotton prices.
On the one hand, Chinese government has purchased approximately 4 million tons of domestic and foreign cotton, accounting for approximately 15 percent of total global cotton supply, and about 40 percent of total domestic demand.
The huge scale of purchase and storage of cotton means that China has plenty of chips to control domestic and even global cotton price trends.
They say, “India could not be a mute spectator to the fact that its low priced cotton was exported to other countries and at later stage would need to import cotton at higher prices.
“Hence the decision to suspend cotton exports and also create cotton reserves to meet the needs of the cotton textile sector before the onset of the new 2012-13 cotton season and also control low-cost cotton resources”, they conclude by saying.
Fibre2fashion News Desk - China