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Allow 40 lakh bales duty free import of cotton: SIMA

New Delhi.  With anticipated shortage of cotton in India, Southern India Mills Association (SIMA) on Monday requested the Centre to allow 40 lakh bales duty free import of medium-level staple cotton to avoid job losses and appealed to Prime Minister Narendra Modi for his intervention in cotton policies.

The country has been so far producing surplus cotton and exporting to different countries, including Bangladesh. During the current season, owing to substantial increase in demand and export of around 50 lakh bales, the country is likely to face 30 to 40 lakh bales cotton shortage, SIMA Chairman Ravi Sam told reporters here.

The unprecedented increase in domestic cotton price from the level of Rs 135 per kg (Feb 2021) to Rs 219 per kg (Feb 2022) in one year, an increase of around 65 per cent is greatly affecting the exporters to meet their export commitments. The levy of 11 per cent import duty has aggravated the cotton market in India, he said.

As the seed cotton price (kapas) is ruling around 70 per cent higher than the Minimum Support Price, the farmers, ginners and traders are hoarding cotton hoping for further increase in prices.

The arrival of fresh cotton has drastically reduced to around 220 lakh bales during February as against around 293 lakh bales during the same period last year. Out of 220 lakh bales that arrived in the market, around 150 lakh bales have been consumed by the mills, 30 lakh bales have been contracted for exports, 15 to 20 lakh bales are in the pipeline and around 20 lakh bales are with the trade and ginners.

Hence, the spinning mills are having one to two months stock only, as against the normal stock of three to six months during February, Ravi Sam said.

The steep increase in cotton price on a daily basis is seriously affecting the exporters, who have three to four months’ export contract with committed price and a few traders are intensively using MCX and NCDEX cotton futures to speculate the prices by creating artificial scarcity and therefore, the entire industry is heading towards a crisis during the off season, he noted.

In view of this, SIMA is appealing to Prime Minister Modi for immediate intervention regarding the cotton policies and take appropriate steps to avoid stoppage of production and job losses and enable the exporters to meet their export commitment during the off season.

Ravi Sam also appealed to the prime minister to implement the Technology Mission on Cotton 2.0 (TMC 2.0) to ensure India remains as a cotton surplus country as already recommended by the Ministry of Textiles with adequate funds with four Mini Missions viz. – Technology Development, Technology Transfer, Clean Cotton and Branding Indian cotton and its textile products. PTI