Cotton crisis snowballing in to a matter of survival

20 Jun '08

4 min read

Most of our cotton exports are to China and Pakistan, which are our major competitors in international markets for cotton textile products.

It is not in the interest of the economy to supply the most valuable raw material to our most prominent competitors and generate the employment opportunities in the down stream industry in those countries, rather than in India!

CITI had organized a meeting in Mumbai on the June 18, 2008 to discuss the cotton crisis and possible solutions. Various industry associations and Export Promotion councils in the Textile sectors attended the meeting.

The participants were unanimous in their opinion that given the seriousness of the situation, a personal intervention at the level of the honorable Prime Minister of India can save the entire textile chain of the country from the impending crisis which threatens the very survival of several mills and other production units in the textile chain.

Shankar6, which is the most popular variety of Indian cotton was available in June 2007 at a price of Rs. 21,000 a candy. In June this year it is selling at over Rs.28,500 a candy - an increase of over 35 percent.

This illustrates the extent of price increase that this vital raw material has registered this year. The industry is unanimously of the opinion that an uncontrolled export of cotton is primarily responsible for this situation.

The following measures could be implemented in order to restrict the run away increase in cotton prices and to improve the availability of cotton for the textile industry:

I. Export of cotton should be suspended immediately until December 31, 2008, by which time the new crop would arrive and the situation can be reviewed.

II. Custom duty of 10% and Additional Custom Duty of 4% applicable to import of cotton should be withdrawn immediately, so that cotton can be sourced by the industry from wherever it is available at affordable prices.

Click here to view cotton statistics:

Confederation of Indian Textile Industry

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