The Hindu Business Line : Textile body for suspension of cotton exports till Dec

“Most of the cotton exported from the country is to China and Pakistan and it will not be in our interest to supply our valuable raw material to our competitors.”

G. Gurumurthy

Coimbatore, June 24 Confederation of Indian Textile Industry (CITI), the apex textile and clothing industry chamber, has asked the Prime Minister, Dr Manmohan Singh, to stop export of cotton temporarily till December and at the same time remove the 10 per cent customs duty and the additional customs duty of 4 per cent on import of cotton as immediate measures to stem the domestic cotton prices.

Seeking these measures that are urgently needed to restrict the run away cotton prices and improve the availability of cotton for the domestic textile industry, the chamber Chairman, Mr P.D. Patodia, in a letter addressed to Dr Singh, has pointed out that in spite of a record cotton production in the country, the current prices of cotton have shot up by 35 per cent compared to last year and an uncontrolled cotton export was responsible for this.

Competition

Most of the cotton exported from the country is to China and Pakistan, which are our major competitors in international markets for cotton textile products. Hence, it will not be in the interest of our economy to supply our valuable raw material to our prominent competitors, as it would generate employment in the downstream industry in those countries, instead of in India, Mr Patodia noted.

India could improve the cotton yields through improvements achieved on the strength of the Government’s policy initiatives implemented by the Cotton Technology Mission and through educating cotton farmers on use of modern technology and production practices. But the advantage of improvement in our cotton economy is accruing to our competitors rather than benefiting our own textile industry, the CITI letter said.

Price situation

On the cotton prices, the letter said that most of the increase in prices this year occurred after cotton changed hands from the farmers to the traders. Large multinational companies operating in international cotton markets had now become active in our market. Wielding competitive finances available at Libor (London Interbank Offered Rate), these traders have cornered cotton stocks in order to increase prices. These traders are interested in selling cotton to the domestic industry since they anticipate continued increase in prices due to depleting availability.

Export rise

The CITI letter pointed out that a reasonable ending stock of around 60 lakh bales is necessary to ensure cotton prices remain competitive but this year the ending stock had fallen to 43 lakh bales because of increased exports — from 59 lakh bales last year to 85 lakh bales.

Though the cotton advisory board had estimated this year’s export to be 85 lakh bales, the trade estimate has put the figures at 95 lakh bales. Many in the industry think the actual exports may even exceed 100 lakh bales.

The confederation, which had organised a meeting of various industry associations and export promotion councils in the textile sector to discuss the cotton issue, held the view that a personal intervention at the Prime Miniter’s level could save the country’s textile sector from the impending crisis that has threatened the very survival of the entire textile value chain.

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