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Domestic market in paucity of cotton despite a production surplus

05
Jun '08
Cotton production in the period 2007-08 reached 31.5 million bales earning India the reputation of being the second largest cotton producer in the world. However, the domestic textile sector is still being hit by sky rocketing cotton prices.

Industrial sources informed Fibre2fashion that reasons for such paradoxical situation can be attributed to the huge amount of exports of the raw material which has left domestic market with insufficient stock for consumption. As a consequence, prices for cotton have increased by leaps and bounds bringing huge losses to manufacturers and millers.

To heighten the condition there has been a speculation that middle players from outside have been purchasing and hoarding cotton bales to sell it later.

Cotton Advisory Board has estimated that domestic consumption this year will touch 24.1 million bales while exports are likely to be around 8.5 million bales. Closing stock on the other hand will amount to 4.3 million bales.

In such gruesome conditions, a plea has been made to the Government to either remove import duty which is currently pegged at 14 percent or levy a five percent export tax on cotton.

Experts believe that this regulation should be brought about by government bodies like the Cotton Corporation of India as this will give the industry a clear idea about the actual production and the amount exported.

Fibre2fashion News Desk - India


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