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SIMA Chief appeals PM to prevent further cotton export

01
May '12
The predominantly cotton based Indian textile industry which provides direct employment to over 25 million people in the country is currently facing a grave crisis due to high volatility in cotton prices prevailed during the last year which was caused mainly due to allowing export of 55 lakh bales of cotton in 45 days. Later, the glut in the international and domestic market has made the mills to incur huge cash losses in the history of Indian textile industry.

The acute power shortage in Tamil Nadu added fuel to the situation and the industry in the state is the worst affected which account for 47 per cent of the spinning capacity in the country.

The industry has been pleading for a debt restructuring package consisting of two years moratorium for repayment of principal amount with repeated restructuring facility with necessary RBI guidelines and conversion of eroded working capital into five years term loan from August 2011 onwards. Since there has been undue delay in announcing the debt restructuring package, the textile mills have totally eroded the working capital and do not have funds to procure the required cotton for the season.

In a press release, Mr S Dinakaran, Chairman, The Southern India Mills' Association (SIMA) has stated that the cotton export policy and the current cotton stock position in the country has come as a rude shock for the industry which would result in grinding halt of the entire cotton textile industry during the end and beginning of the season, at least for a period of few months and make the industry unviable.

Mr Dinakaran has pointed out that the Empowered Group of Ministry formed under Chairmanship of Hon'ble Union Finance Minister had taken a decision to maintain at least 50 lakh bales of cotton as the closing stock during the cotton season 2010-11.

He has remarked that already around 115 lakh bales of cotton has been allowed for export during the current cotton season as against the Cotton Advisory Board (an advisory body consisting of all the stakeholders) decision of 84 lakh bales for the current season leaving a closing stock of 25 lakh bales. He has stated that the industry is shocked to note that a decision might be taken to allow another 20 lakh bales for export in today's GoM meeting and later by the PMO office.

SIMA Chairman has pointed out that the Cotton Advisory Board which met on 18th April 2012 had estimated that the closing stock would be only around 25 lakh bales with 115 lakh cotton bales already allowed for export.

He has said that the working capacity of the mills likely to improve from May in Tamil Nadu due to improved power supply position on account of wind power (wind season during May to September) and the cotton consumption would exceed 23 lakh bales per month as against the current level of 20 lakh bales.

He has added that the market is also on the revival mode after a deep recession. He has furthersaid that China has built a huge stock by importing cotton from India and would have commanding position in the international market with the raw material imported from India and grab the Indian customers while India having produced surplus cotton would face cotton shortage and lose its valuable customers in the international market.

SIMA Chief has appealed to the Hon'ble Prime Minister, Hon'ble Union Finance Minister and Hon'ble Textile Minister to prevent any further export of cotton to sustain the survival of the ailing cotton textile industry and loss of jobs for several millions of people in the country.

Southern India Mills' Association (SIMA)


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