Home / Knowledge / News / Textiles / Provide direct subsidy to farmers: CITI tells Centre
Provide direct subsidy to farmers: CITI tells Centre
06
Jul '18
Provide direct subsidy to farmers: CITI tells Centre
Taking a cue from the Chinese government which has shifted to a direct subsidy route, a couple of years back, the Indian government should devise some direct subsidy scheme for farmers, the Confederation of Indian Textile Industry (CITI) has suggested. It has also asked the government to spell out a clear policy for Cotton Corporation of India (CCI).

Welcoming the ₹1,130 per quintal hike in minimum support price (MSP) on cotton for 2018-19 season announced by the government, CITI chairman Sanjay K Jain said, “At one level, the move would certainly increase farmers’ income, leading to an increase in domestic consumption that would eventually support the overall Indian economy.”

“However, we need to examine the event from different perspectives and understand that the lakhs of farmers gain should not impact the $120 billion industry which employs directly and indirectly more than 10 crore people,” he added.

According to Jain, the impact of around 26-28 per cent increase in MSP would be huge and possibly unprecedented because MSP increased by mere ₹1,320 per quintal from 2009-10 to 2017-18, compared to ₹1,130 per quintal hike for the upcoming season.

The proposed hike in MSP is based on 1.5 times the A2+FL costs and would impact each segment along the supply chain raising the final price of the product. Further, this intervention would also make Indian cotton fibre relatively expensive with respect to international prices.

As textile and clothing exports are still reeling under the pressure to perform, absorbing a hike of 28 per cent would be difficult for the entire textile industry. In spite of some favourable factors like China’s imposition of an additional 25 per cent import duty on American cotton and depreciation of rupee against the dollar, cotton and yarn would face headwinds, Jain said.

He emphasised that the real impact would depend on the movement of international prices of cotton. In case, prices stay above MSP, there will be no issue. However, if prices fall below it, the impact would be severe. The industry is fully integrated with the global market and India being a significant player, cannot work in isolation. Post 2008 recession, Indian MSP was higher than international prices which finally led to a huge loss to the industry and exports dipped significantly.

To meet the twin ends of ensuring reasonable profit for farmers and making cotton available at internationally competitive prices to the industry, a direct subsidy scheme for farmers should be considered at least partly. This would ensure that employment in the labour-intensive textile and clothing industry is not affected and the growth targets of output, export and employment are met.

Giving China’s example, Jain said that a few years back, China had also increased their buying price from farmers significantly which made their domestic prices much higher than the international prices leading to the government accumulating almost 50 per cent of the global cotton which it is still liquidating even after 5 years. This made the Chinese cotton yarn industry unviable and imports of cotton yarn zoomed from India, Vietnam and Pakistan. The Chinese government realised that holding cotton by buying at higher price is not a solution and hence, a couple of years back, it shifted to a direct subsidy route which has made the Chinese cotton industry again competitive and also reduced the government burden of stocking high priced cotton and then selling it at a loss.

Jain hoped that the Indian government would devise some direct subsidy route so that interests of both farmers and the largest industrial employer are equally protected for a win-win situation.

Jain also pointed out that higher MSP would further compel huge cotton procurement by the state-run CCI. In the past, for instance, the Centre raised cotton MSP (medium staple) by a record 39 per cent in 2008-09, driving up CCI’s procurement to an all-time-high of 8.9 million bales. He said the industry is expecting that “a clear CCI Policy is spelt out, so that in case they need to make massive procurement, the industry gets regular offering from them throughout the season at international parity prices (system linking offered prices to ICE may be formulated).” (RKS)

Fibre2Fashion News Desk – India


Must ReadView All

Pic: Shutterstock

Textiles | On 6th Jun 2020

Follow civil society approach in EU textile strategy: MEPs

A group of 53 members of the European Parliament has written a letter ...

Pic: Shutterstock

Apparel/Garments | On 6th Jun 2020

Cambodia postpones indemnity pay in garment-footwear units

The Cambodian labour ministry recently announced postponing the...

Pic: Shutterstock

Textiles | On 6th Jun 2020

India-Bangladesh land-route trade resumes in West Bengal

After Indian traders agreed to create a pool of truck drivers, who...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Estimate loss of $8-$10 billion in turnover

Top executives, Machinery Company

Top executives
Machinery Company

We will promote latest technologies at ITMA Barcelona

Textile industry, Head honchos

Textile industry
Head honchos

It is a well-calibrated budget

Franco Ravazzi,

Franco Ravazzi

Italy-based Tessimenti E Orditi Tinti (T.O.T SRL) specialises in stocking...

Abhishek Dhanuka,

Abhishek Dhanuka

Vyom International Pvt Ltd, established in 2002, is one of Surat's leading ...

Paolo Crespi,

Paolo Crespi

Japan's Epson, a leader in digital textile printing, Italy's For.Tex, a...

Andreas Lukas, Andritz Nonwoven

Andreas Lukas
Andritz Nonwoven

With forces in engineering and process development, Andritz Nonwoven...

Shujaul Rehman, Garware Technical Fibres

Shujaul Rehman
Garware Technical Fibres

Garware Technical Fibres Ltd (formerly Garware-Wall Ropes Ltd) is a...

Robin Grankvist, OrganoClick AB

Robin Grankvist
OrganoClick AB

Robin Grankvist talks about PFCs, additives and various chemicals used in...

Wendell Rodricks, Wendell Rodricks

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Prathyusha Garimella, Prathyusha Garimella

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

Anisha Chaudhari, Threads & Shirts

Anisha Chaudhari
Threads & Shirts

Threads &amp; Shirts is a freshly-tailored concept providing men/women a...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


May 2020

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search