Various associations of the textile industry have made a joint representation to the Government of India seeking a raw material security system for cotton. Headed by the Confederation of Indian Textile Industry (CITI), the joint representation has sought calibration of cotton export for better stability in both availability and price.
According to an official communique by CITI, in spite of production of cotton in excess of the domestic demand, the industry is unable to access quality cotton in the absence of a concrete cotton trade policy and raw material security system.
“Currently, the textile industry in India is saddled with inadequate availability of quality cotton as the government has permitted export of almost 85 lakh of bales as against the estimate of 55 lakh bales by the Cotton Advisory Board (CAB) at its first meeting during the beginning of the cotton season. There is a need to calibrate cotton export to have stability in both availability and price so that the export commitments of the different sectors in the textile value chain get protected,” the communique stated.
Around 14 textile industry organisations including Confederation of Indian Textile Industry (CITI), Federation of Indian Exporters’ Organisation (FIEO), The Southern India Mills’ Association (SIMA), Tirupur Exporters’ Association (TEA), Handloom Export Promotion Council (HEPC), and Indian Spinning Millowners’ Association (ISMA), among others met met at Coimbatore on August 21, 2010 to discuss the cotton crisis and made a joint representation to the Government of India appealing to establish a raw material security system for the textile industry.
The textile industry representatives state that the export of 85 lakh bales of quality cotton would bring down the closing stock to around 38.5 lakh bales, which has been estimated to be about 40.5 lakh bales with 83 lakh bales of export by CAB, bringing down the stock to use ratio to 15 per cent as against the world average of 33 per cent.
“In the past, whenever, the stock to use ratio dipped below 20 per cent the cotton prices had increased abnormally and it is very essential to maintain at least 25 per cent stock to use ratio to have stability in raw material prices and sustain the competitiveness of the textile industry. Excessive exports of cotton and the resulted increase in cotton prices have become a burning problem for the entire textile value chain. The recent notification issued by the government bringing cotton from the ‘restricted’ products to ‘free’ products for export with effect from October 1, 2010 and removing export licensing on cotton has only added fuel to the fire,” the communique further stated.