You are here: Home » Current Affairs » News » National
Business Standard

Piyush Goyal meets industry stakeholders amid call for cotton export ban

This comes amid speculation that the government may ban export of both commodities as a temporary measure to calm down the prices

Topics
Piyush Goyal | cotton exports | Cotton Corporation of India

Shine Jacob & Sanjeeb Mukherjee  |  Chennai/New Delhi 

Piyush Goyal
Piyush Goyal , Union minister for commerce and industry

With cotton and yarn prices on the rise, textiles minister met all industry stakeholders on Tuesday.

The minister said that import of cotton will be permitted duty free till the bill of lading is dated September 30 this year and not based on the bill of entry at Indian Ports. The government will also form a cotton council that will study all the matters relating to cotton and will start functioning with the membership of all stakeholders and will provide its report to the government on the measures to be initiated immediately. The minister also announced formation of a cotton advisory board with representation from textiles ministry, agriculture, agricultural research, commerce, finance along with industry representatives.

This comes amid speculation that the government may ban export of both commodities as a temporary measure to calm down the prices.

Among the major suggestions that the industry came out with include a short-term ban on cotton exports, as no farmer is going to get affected. This is because cotton is now left with the traders only.

On the other hand, ban on yarn exports, removal of cotton from commodities traded at Commodity Exchanges and declaration of cotton as an essential commodity were other key suggestions that the industry gave.

Looking at the prices, Indian cotton has increased the most and Chinese the least in the last one year.

Based on industry estimates, Shankar-6 cotton, a benchmark for exports, more than doubled in the last one year.

China Cotton Index saw only 38 per cent increase in May 2022 compared to the same time last financial year.

The price of cotton has more than doubled to around Rs 95,000 per candy (356 kg) from Rs 48,000 during the beginning of this season in October 2021. Farm gate raw cotton prices have risen by a sizeable amount.

“Around 18 months back, a unit could buy 1 kg of yarn for Rs 200, whereas now, with the same amount, a unit can buy only 400 grams.

Chart

This apparently reveals how much knitwear exporting small and medium units are undergoing financial stress on the operational front. The major concern is that liquidity has been drained off from its sanctioned limits,” said Raja M Shanmugam, president of Tirupur Exporters’ Association.

The association called for a specified scheme for micro, small and medium enterprises (MSMEs) under the Emergency Credit Line Guarantee Scheme (ECLGS).

It sought 10-20 per cent of the existing credit immediately, mainly to bail out knitwear garment players, comprising 95 per cent of .

According to Tamil Nadu Spinning Mills Association (Tasma), due to the alarming increase in the cost of cotton, many spinning mills have been forced to switch over to blended yarn. This comes as they are unable to manage their working capital requirements.

“Around 90-95 per cent of the spinning mills do not have cotton stock of more than 15-30 days during this entire season. They fear that cotton stock kept for more than their instant requirements may result in losses. This is something they experienced during 2010,” a Tasma official informed the government during Tuesday’s meeting.

Among the long-term solutions suggested include mandating (CCI) to keep a minimum stock of 100 lakh bales.

At present, CCI is mandated to purchase cotton whenever prices go below the minimum supporting price (MSP) fixed by the government. This is to protect cotton-producing farmers.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, May 18 2022. 00:55 IST
RECOMMENDED FOR YOU
.