CITI & Indian textile bodies urge Piyush Goyal for cotton stability
NEW DELHI : In a collective effort to address the challenges faced by the Indian Cotton Textiles and Clothing Industry, the Confederation of Indian Textile Industry (CITI) and other textile associations representing major users of cotton have submitted a joint memorandum to Indian Minister of Textiles Shri 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 acknowledges and appreciates the formation of the Textile Advisory Group (TAG) under the chairmanship of Suresh A Kotak. Under the guidance of minister Goyal, various policy initiatives have been undertaken by TAG, including the reconstitution of the MCX Product Advisory Committee and the implementation of the Pilot Project on Cotton master plan, among others.
However, the joint memorandum brings to light the impact of CCI MSP cotton procurement practices on cotton prices, especially when carried out on a large scale. The textile industry emphasises that the current practices favour multinational cotton traders, leading to speculation in cotton prices that adversely affect the yarn prices and exports of cotton-based textile and clothing products, CITI said in a press release.
The joint memorandum, addressing the financial challenges faced by the MSME spinning segment, has put forth several measures for consideration by Goyal. It suggests the initiation of CCI cotton sales to registered textile and spinning mills starting from February or March. The memorandum recommends keeping MSP procured cotton as a buffer stock, which should be released in accordance with international price differentials to maintain price stability. Moreover, it proposes the announcement of monthly cotton prices that take into account the MSP procured price, carrying charges, and other incidental expenses. The memorandum also calls for the extension of a uniform free period of 60 days for all actual users and suggests collecting a one-time earnest money deposit (EMD) of 10 per cent for advance bookings.
Additionally, the memorandum urges the extension of a key loan facility, which would allow the storage of pre-booked cotton at individual mill premises for day-to-day usage against payment. It advocates for the sale of cotton in multiples of 130 to 150 bales, equivalent to one truckload, aligning it with MCX standards to support small spinning mills. The establishment of a sub-committee is recommended to monitor CCI’s trade practices and prices, with the authority to implement corrective measures as necessary. The memorandum highlights the need to facilitate structured financing for CCI and MSME textile units at a priority lending rate.
The joint memorandum emphasises 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.