Cotton procurement policies adversely affect the yarn industry

The Confederation of Indian Textile Industry said the current procurement practices of the state owned Cotton Corporation of India favored multinational cotton traders, leading to speculation in cotton prices that adversely affect the yarn prices and exports of cotton-based textile and clothing products

Confederation of Indian Textile Industry (CITI) and other textile associations representing major users of cotton have submitted a joint memorandum to Textiles Ministeri Piyush Goyal. The memorandum highlights concerns related to the Cotton Corporation of India (CCI) Minimum Support Price (MSP) cotton procurement practices and proposes changes to ensure stable prices and smooth supply to the downstream sectors

The Memorandum brings to light the impact of Cotton Corporation of India’s Minimum support price cotton procurement practices on cotton prices, especially when carried out on a large scale. 

 Considering the financial stress faced by the MSME spinning segment, the joint memorandum requests Mr Goyal to take the following measures including Commence selling CCI cotton to registered textile/spinning mills from February/March. 

Retain MSP procured cotton as a buffer stock, releasing it based on international price differentials to ensure price stability, Announce monthly prices, taking into account MSP procured price, carrying charges, and other incidental charges, Extend a uniform free period of 60 days for all actual users, Collect a one-time Earnest Money Deposit (EMD) of 10% for advance booking, Extend a key loan facility by storing pre-booked cotton at individual mill premises for day-to-day use against payment, Sell cotton in multiples of 130 to 150 bales (one truckload) on par with MCX to benefit small spinning mills, Establish a Sub-Committee to monitor CCI's trade practices and prices, taking corrective measures when necessary and Facilitate structured financing to CCI/MSME textile units at a priority lending rate. 

The joint memorandum emphasizes that adopting these policies would be mutually beneficial for CCI, the Government, and the user industry. It aims to ensure stability in cotton prices, protect the interests of MSMEs, and promote the long-term growth of the Indian cotton textiles and clothing industry.