The Southern India Mills’ Association (SIMA) has urged the Union Textile Minister Smriti Irani to intervene in the cotton trading policy of Cotton Corporation of India (CCI) and direct CCI to avoid holding cotton. Selling cotton at market price on a regular basis could arrest price escalation, and help spinning mills to procure cotton at a competitive price.
Though CCI started procurement of cotton in November, it has started to offer the same to the spinning mills only last week after accumulating over 35 lakh bales of cotton and quoting very high price than the actual market price, SIMA said in a report.
“As the US-China trade war is likely to end and also because China had depleted its cotton reserves significantly during the last few years, China has geared up to import huge volume of cotton from the US and India ( two largest cotton producing countries in the world),” said SIMA Chairman Ashwin Chandran.
“As per the market information, over 20 lakh bales of cotton have already been exported from the current cotton crop and total export this season might reach the level of 60 lakh bales as against 50 lakh bales estimated by the Cotton Advisory Board (CAB). If the current trend continues, it may result in panic situation in the Indian cotton market,” Chandran added.
Mills are not able to source cotton from CCI as the price quoted by CCI is exorbitantly high when compared to the market price quoting rs. 46,000 per candy of 355 kg as the base price as against the market price of rs. 40,000 per candy, according to Chandran.
An industry friendly cotton trading policy by CCI would not only facilitate to mitigate the current challenges, but also would enable the industry to grab the market opportunities in the aftermath of US-China holding talks to end the trade war shortly, he added.