Several small-scale units in the state of Madhya Pradesh (MP) have been moving to the neighboring state of Maharashtra since past few years as cotton processors and traders in MP are again facing difficulties due to higher procurement prices, low arrival, high power tariff and irrational taxation.
Last year, there were around 24 units operating in Sendhwa town, which is 300 km from Bhopal. But currently, only 15 units are functioning in the town and running with hardly 25-30 percent production capacity, according to the MP Association of Cotton Processors and Traders.
Overall processing capacity of cotton ginning units in MP is about 20 million quintals but this year, production is expected to be just around 4 million quintals, said an official.
In addition to this, Bt cotton is the another reason, which has put cotton processors and traders of MP in a tight spot, as the arrival period of Bt cotton is shorter than the local variety and now the season does not continue, beyond month of May.
Burhanpur, a historic town in the state, witnessed the shifting of seven cotton processing units to Maharashtra, out of 12 units, this year. Cotton processors urged the state government to free the commodity from entry tax. But, the government refused this demand, which again put processors in a bind as neighboring states levy nil entry tax on cotton.
The margin earned by ginners and traders on a cotton candy supplied to yarn manufacturers is far less than the margin Maharashtrian cotton processors avail. On one cotton candy of 356 kg sold at Rs. 26,000, MP processors generate margin of just Rs. 200, while, Maharashtrian processors are able to reap more than Rs 1,200.
Fibre2fashion News Desk - India