Sendhwa cotton units going to seed

Cotton ginning and pressing units of Sendhwa town are facing closure. These formed once the biggest cotton mandi in Asia.

The cotton season petered out of the Sendhwa cotton mandi in February this year, which normally keeps ginning mills humming till May-June. Even the higher production of Bt cotton (transgenic cotton) is of no use in Madhya Pradesh.

The units -- with a combined turnover of Rs 800-1,000 crore -- started taking shape during the 1940s, reached 110 in 1998.

Now, according to industry sources, there are just 27 units, struggling to survive and planning to shift to Maharashtra because of high mandi taxes, low power availability, law and order problems, high power tariffs, the non-availability of cotton, and the government machinery's neglect.

Cotton mandis of western Madhya Pradesh in Sendhwa, Khandwa, Kukshi, Dhar, Dhamnod, Manawar, Khetia, Pansemal and Ajand reported good arrival till last year.

According to local mandi officials, the arrival slipped by more than 70 per cent to 100-700 bales of 160 kg each against the requirement of 2,500 bales of Sendhwa millers.

"As many as 25 units shifted to Maharashtra recently. We have also set up a unit each in Chalisgaon, Jalgaon and Aurangabad since Maharashtra has 0.50 per cent mandi tax against 2 per cent in Madhya Pradesh. The Maharashtra government is offering 100 per cent exemption on income tax for new units. Nothing is left in Madhya Pradesh for the ginning industry," said Sunil Agrawal, promoter of a ginning mill Satyam Kotex.

The other taxes include entry tax of 1 per cent and a cess of 0.20 per cent on each lot of sales of Rs 100 sales.

"High taxes increase input cost on 100 bales by a maximum of Rs 25,000 (assuming cotton is priced at Rs 2,100 per quintal) in Madhya Pradesh. Add to it extortions by anti-socials," said Gopal Tayal, secretary of Sendhwa Cotton Association.

The association's demand to bring the taxes at par with those of Maharashtra fell on deaf ears.

"Our association requested Chief Ministers Uma Bharti and Babulal Gaur to do this. We also requested Shivraj Singh Chouhan, but in vain," said an industry source.

Sendhwa has reported the closure of 40-50 units in the past three years. Maharashtra has snatched away all business from Madhya Pradesh during by opening cotton market to private traders. Thus cotton growers of Madhya Pradesh started selling cotton to Mahrashtra traders for a better return.

At one hand State department of industries is making tall claims to attract big investment and developing a textile park in Satlapur (near Bhopal) even after three years of constant migration of ginning units, the state government has no concrete strategy to retain the ginning industry.

"We have to review the situation," said OP Rawat, principal secretary department of industries. Although agriculture department is hinted at rationalization the taxation on cotton, no assurance has been given to ginning and pressing millers.

"We will relook at mandi tax and other duties on cotton to promote value addition and will come out with decision within 15 days," said Pravesh Sharma, principal secretary department of agriculture.

A ginning unit with 16 double roll requires at least 500 quintals of cotton per day while the availability is hardly 100 quintals a day.

Interestingly the previous Congress government had amended Mandi Act provisions to allow traders to procure any commodity outside mandis on payment of a fee in lump sum but the cotton traders are ignorant of the facility.

"We have no idea if the government allows us to procure cotton outside mandis," said Mr Tayal.

Madhya Pradesh grows cotton on 7 lakh hectares against 8.6 lakh bales target this year (07-08). The cotton yield, according to Mr Pravesh Sharma, is likely to remain healthy.

While the data collected by association reveals that Madhya Pradesh grows cotton on 6 lakh hectares (2005-06), produced 18 lakh bales at 510 kg per hectare.