Increase in MSP of cotton worries Ludhiana exporter

15 Sep '08

2 min read

The MSP of medium staple cotton, which includes the popular Shankar variety has been raised by 40% to rs 2500 per 100kg. The MSP last year was Rs 1750-1800.

The MSP of long staple fibre was raised to Rs 3000 per 100 kg from 2250 in 2007-08 season.

The decision is purely to help the cotton growing farmers but it will have an adverse effect on the people working in the garment industry due to job losses.

The Ludhiana garment industry is already going thru a lean patch due to slump in the US economy. Buyers are already asking for lesser and lesser prices. The energy cost has already increased due to running the units on generators as there is power shortage. This increase in MSP will further increase the cost of raw material.

Earlier the govt had announced reduction in the duty drawback, which was one more setback to the exporters.

It appears Govt. has left the cotton garment manufacturers on their own fate. This is really a bad news for Ludhiana garment industry which provides employments to thousands of people.

Many exporters have decided to run their units at 25 to 50 percent of their capacity to avoid the losses. This has resulted in rendering many people jobless.

It appears the Govt. is working on the theory of paying Peter and charging Paul. The net result remains the same. Unless a balanced approach is adopted, the end result seems far from sight.

Saimex International

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