The Southern India Mills’ Association (SIMA), a spinning mills body has asked the Union government to direct the Cotton Corporation of India (CCI) not to hoard the commodity and sell it at market price on a regular basis, reports Financial Express.
“China, the largest consumer of cotton, has depleted its cotton reserves significantly in the last few years. Moreover, its trade war with the US is expected to end soon, China has geared up to import huge volume of cotton from the US and India (the largest cotton producing countries in the world), said Ashwin Chandran, SIMA chairman in a communication to the union textiles ministry.
It is believed over 20 lakh bales of cotton have already been exported from the current cotton crop, and export might reach the level of 60 lakh bales as against 50 lakh bales estimated by CAB. If the same trend continues, it may result in panic situation in the Indian cotton market. Hence, the union textile minister should instruct CCI to sell the cotton at market price so that the spinning mills could procure the same at a competitive price, the SIMA chairman pointed out.
According to him, mills were not able to source cotton from CCI as the price quoted by CCI is exorbitantly high when compared to the market price. CCI is quoting Rs 46,000 as the base price as against the market price of Rs 40,000 per candy of 355 kg.
CCI should adopt industry-friendly trading policy which would not only facilitate to mitigate the current challenges, but also enable the industry to grab the market opportunities in the aftermath amidst the US-China talks to end the trade war, he added.
He said that the pre-dominantly cotton based Indian textile industry often faces crisis due to volatility in cotton prices. Apart from the multinational cotton traders, who cover cotton in large volume during peak season, hoard the cotton and speculate the prices. The trading policy of CCI also often aggravates the market.