The Federation of Indian Chambers of Commerce and Industry (FICCI) has sought urgent intervention of the Ministry of Textiles in adequate release of cotton procured by the Cotton Corporation of India (CCI).
In a letter to textiles minister Santosh Kumar Gangwar, FICCI secretary general A Didar Singh said there has been a perceptible rise in cotton prices in India during the last few weeks and the availability of cotton in the market has also reduced for the textiles industry.
“The role of CCI is primarily to ensure Minimum Support Price (MSP) operation for the farmers so that they get a remunerative price for their products. However, at the same time if the procured cotton is not released in time for the industry and is retained as a stock by CCI, it distorts the market and leads to artificial increase in prices thereby making the user segment uncompetitive,” Singh said in the letter.
According to FICCI the arrival of cotton in the Indian market has dropped considerably in the last few days to 20,000 bales. The total requirement of mills is close to 85,000-90,000 bales per day whereas CCI has been offering only 40,000 bales per day, which also has largely remained unsold because of excessively high prices.
Of the 85.8 lakh bales of cotton procured by CCI in the current season, it has till date sold only 10.8 lakh bales, and hence it is carrying stocks of 75 lakh bales.
In some of the states like Andhra Pradesh, Telangana and Maharashtra, CCI has bought large quantities through MSP operations, creating a shortage of cotton in these states. The local mills are forced to buy cotton from distant places, incurring additional transportation and other costs. CCI’s huge stocks are pushing up cotton prices all over the country. Taking advantage of this situation, private traders are hoarding cotton because of the perception that non-disposal of cotton by CCI would push up cotton prices further. If CCI disposes off procured cotton in large quantities at reasonable prices, hoarding by private traders would also stop and they would be forced to sell the cotton at market prices, Singh explained in his letter.
Indian cotton was cheaper than international cotton from the beginning of the current cotton year. But the situation has changed significantly now and the prices are substantially above the international prices mainly because of low cotton arrival in the market, FICCI said and insisted that adequate release of cotton is required to ensure that cotton is available to the mills and industry at a competitive rate and at the earliest.
