Textile mills importing cheap cotton from Pak

Indian textile mills have started importing raw cotton from Pakistan and are also scouting for other avenues of purchases as domestic prices have risen following a sharp hike in minimum support prices(MSP).

“Yes, millers are importing from Pakistan. Some may even purchase from the US. The domestic prices are so high due to the significant increase in MSP that millers are being forced to buy from other countries,” Confederation of Indian Textile Industry Secretary-General D K Nair told PTI.

Corroborating Nair’s statement, a leading cotton broker from Gujarat, Neerav Dalal, said: “About 150,000 bales (One bale is equal to 170 kg) of raw cotton from Pakistan were imported through us recently for cotton textile mills. Part of the consignment is for a leading textile mill here.”

 

Dalal, however, declined to name the mill.

While declining to either confirm or deny cotton imports from Pakistan, a senior Arvind Mills executive said, “We keep importing cotton from various countries to meet requirements. And as a business policy, the name of the country cannot be disclosed.”

The government has sharply increased the MSP of standard cotton (long staple) to Rs 3,000 per quintal for 2008-09 from Rs 2,030 in the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 per quintal.

The rise in MSP is seen as a pro-farmer policy by the government in the run-up to the general elections next year.

“The cotton prices in the open market are still ranging between Rs 22,600 and Rs 23,500 per candy, while that in Pakistan rules at Rs 19,000-19,600,” Dalal said.

Though millers may have to settle for a bit inferior quality of cotton, it is still a viable commercial option for them, Nair reasoned.

“The transportation costs of cotton imports through the Wagah border work out to be Rs 900-1,000 per candy, which, on being added to candy price, are still cheaper than the local rates of cotton,” another cotton broker said.

Cotton prices are ruling at the MSP level from around Rs 2,200 in September, when the MSP was announced.

Cotton imports, including transportation costs, are cheaper mainly for textile mills in northern parts, he added.

India’s total cotton imports stood at about 500,000 bales last year. An industry expert said, considering the situation, purchase from overseas market will definitely be much higher this year.

Recently, a delegation of Gujarat Ginners’ Association (GGA) met Union Agriculture Minister Sharad Pawar and demanded subsidy on the purchase of cotton, saying the MSP fixed by the Centre is “very high”, which leaves no room for profits.

GGA President Dilip Patel said the Cotton Corporation of India, the nodal agency for cotton purchase from farmers at MSP, should sell the white commodity to ginners at Rs 200 subsidy.