Interviews
SICA pleads government to save cotton industry
01 Oct '08
7 min read
Since the industry is not only the largest employment providers in the country but the fate of 6 crores of Cotton farmers in this country is also closely linked with the fortunes of this industry.
This year, saw a new development in cotton trading, when large Multi Nationals bought Indian Cotton, stored them in warehouses and sold them to the local mills. The sales by these companies are made under the rules and arbitration of the International Cotton Association, Liverpool (formerly known as Liverpool Cotton Association).
It is strange that Indian cotton bought in India, and stored in Indian warehouses, and resold to Indian buyers should be transacted under the rules of an Association situated in Liverpool. SICA has received representations that these transactions should be done subject to rules of India-based Associations.
In this connection, SICA recalls the efforts taken by SICA, SIMA and the CITI (erstwhile ICMF), for bringing the cotton imports also under Indian Arbitration. Now that cotton import duties have been completely withdrawn, the prospects of cotton imports can increase whenever there is price parity.
It is therefore necessary, that these efforts should be revived and imports also should be brought under Indian arbitration. This is the practice in China.
The present situation is that CST is being paid on cotton being bought by the mills in Tamil Nadu from other states and this is not vattable as the yarn is being sold mostly in markets outside the state.
Though CST is being phased out, it will take two more years for complete abolition of CST. In the meantime the burden on Tamil Nadu Mills is very high. A viable system should be introduced to enable cotton sellers from other states to bring and store Cotton in warehouses in Tamil Nadu without application of CST and sell them locally under VAT.
This also will enable Mills to buy cotton, when they need and provide enough competition among traders and establish a reasonable price level. There has to be coordinated action for this between the Central and State Governments.
This year, saw a new development in cotton trading, when large Multi Nationals bought Indian Cotton, stored them in warehouses and sold them to the local mills. The sales by these companies are made under the rules and arbitration of the International Cotton Association, Liverpool (formerly known as Liverpool Cotton Association).
It is strange that Indian cotton bought in India, and stored in Indian warehouses, and resold to Indian buyers should be transacted under the rules of an Association situated in Liverpool. SICA has received representations that these transactions should be done subject to rules of India-based Associations.
In this connection, SICA recalls the efforts taken by SICA, SIMA and the CITI (erstwhile ICMF), for bringing the cotton imports also under Indian Arbitration. Now that cotton import duties have been completely withdrawn, the prospects of cotton imports can increase whenever there is price parity.
It is therefore necessary, that these efforts should be revived and imports also should be brought under Indian arbitration. This is the practice in China.
The present situation is that CST is being paid on cotton being bought by the mills in Tamil Nadu from other states and this is not vattable as the yarn is being sold mostly in markets outside the state.
Though CST is being phased out, it will take two more years for complete abolition of CST. In the meantime the burden on Tamil Nadu Mills is very high. A viable system should be introduced to enable cotton sellers from other states to bring and store Cotton in warehouses in Tamil Nadu without application of CST and sell them locally under VAT.
This also will enable Mills to buy cotton, when they need and provide enough competition among traders and establish a reasonable price level. There has to be coordinated action for this between the Central and State Governments.
South India Cotton Association
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