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FIEO: Govt to immediately suspend export of raw cotton

12
Nov '09
Mr. A Sakthivel, President, Federation of Indian Export Organisations(FIEO) appealed the Hon'ble Prime Minister,Finance Minister, Deputy Chairman, Planning Commission, Commerce & Industry Minister, and Minister of State for Commerce & Industry to immediately suspend export of raw cotton at least up to the end of current financial year in the larger interest of country's export of textiles, apparel and made ups.

President said that the basic raw material cotton plays a major role in the textile industry which accounts for more than 60% of our fibre. Apparel, made-ups and fabric exporters requires cotton yarn at competitive rate to compete with China, Bangladesh, Sri Lanka and Vietnam etc., where textile industry has been provided huge stimulus and many of them beat us in international market by importing raw cotton from India. He drew the attention of the Government that the exports data released yesterday shows a decline of 11.4% in October as compared to the same figure last year. However, exports of readymade garments exhibited a decline of whopping 30% from US $ 732 Million in Oct 2008 to US$ 517 Million in Oct 2009.

President FIEO added that since textile is the next biggest employer after agriculture in India, decline in exports may have serious ramification for the economy particularly when monsoon was also below average in few meteorological zones of the country.

Mr Sakthivel in his appeal to the Government said that during cotton year 2008-09 (October-September), the Government increased Minimum Support Prices for cotton by around 43% compared to the previous year and this led to substantial increase in cotton prices last year. The same MSPs have continued for the current year. With increase in cotton consumption and apprehensions of a lower crop in the country because of the vagaries of the monsoon, cotton prices have increased substantially during the last few weeks. The unhealthy increase in domestic cotton prices has resulted largely from speculation by international cotton traders who have cheap capital available from global sources and therefore have an advantage over Indian mills and even Indian traders. There are reports that nearly 20 lakh bales of cotton has already been bought by traders for exports pushing up domestic cotton prices in the process. Operation of Minimum Support Prices ensures that cotton farmers get remunerative prices for their produce.Increase of cotton prices in the market through speculation basically helps only traders at the cost of both the farmers and the textile industry.

President FIEO said that The Indian economy largely depends on the cotton farmers and the textile industry and therefore, the Government should take care of the interest of both the segments. The cotton textile industry was not only neglected but also saddled with high cotton cost, miserably failed to compete with the multinational cotton traders during the peak season and ultimately end up paying very high prices to the same traders even for the domestic requirement. Over 18 lakh bales of new crop has already been covered by a few large traders for export which has skyrocketed the domestic cotton prices in a week's time. Already export contracts for over 10 lakh bales have been registered with the Textile Commissioner and more registration pouring in. Suspending cotton exports temporarily will help textile sector to sustain in the global export market.


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