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High MSP responsible for current crisis in textiles sector – CITI

15
Dec '08

Mr D K Nair, Secretary General, CITI

Output of textile sector for the month of October registered a fall of 9.6 percent. The wool, silk and man-made fibre textiles category plunged 4.8 percent, while the textile products (including apparel) category showcased a decline of 4.6 percent.

Industry experts attribute sharp hike in minimum support price (MSP) for cotton and sluggish exports, responsible for the present deterioration.

“Unreasonably high MSP announced by Government for cotton year 2008-09 have played a major role in precipitating the current crisis in the textiles and clothing industry. Our cotton prices are now 15-20 percent above international prices. This would mean that we cannot export either cotton or cotton textiles competitively! Cotton consumption is therefore likely to decline. Thus, the MSP will not only prove to be against the interest of the textile industry but also the long term interest of cotton farmers,” told Mr D K Nair, Secretary General, Confederation of India Textile Industry (CITI), to Fibre2fashion.com.

What has made the matter worse is when prices in global markets are declining, domestic rates for cotton has skyrocketed and this has affected the whole down stream chain.

Because of this India is losing its share, especially in the US market, and increasing competition from countries like Vietnam and Bangladesh, is making it hard further.

Talking about measures Government should take to control the disparity in Cotton Prices in comparison to international prices, the CITI General Secretary stressed, “Since revising MSP, which is the logical step, may not be politically feasible, what Government can now do to mitigate the situation created by the MSP, is to ensure that cotton procured at MSP is promptly disposed of to mills at international prices.

"Additionally, mills can be enabled to buy cotton by relaxing the interest rate, margin money requirement and time period for working capital provided to mills for purchasing and stocking of cotton.”

For latest IIP (index of industrial production) data of the textile industry click here

Fibre2fashion News Desk - India

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