*****Rein in cotton hoarding: Textile industry – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/rein-in-cotton-hoarding-textile-industry/article65424498.ece

Industry has urged the govt to remove cotton from the list of commodities traded on the commodity exchanges NAGARA GOPAL | Photo Credit: NAGARA GOPAL

‘Cotton Corporation should buy in bulk from farmers and release it to the mills’

The textile industry has urged the government to probe cotton arrivals in the market, to check for hoarding, amid an unprecedented increase in raw material prices. They have also sought long-term policy measures.

On Monday and Tuesday, 29-30 mm cotton was quoted at Rs. 1,15,000–1,17,000 a candy for mill delivery, a Rs. 7,000–9,000 spike from last Friday’s prices.

Speculative trade

But including moisture and trash losses, the cost works out to Rs. 1,19,600–1,21,680,” said K Venkatachalam, Chief Advisor, Tamilnadu Spinning Mills’ Association.

“We have been monitoring cotton arrivals since the beginning of the season so the immediate solution would be to identify where the cotton is being stopped or hoarded. About 90 lakh bales of cotton is yet to come. This is highly alarming.

“Government should look into this issue. Cotton traders are holding on to the raw material and are not allowing mills to purchase it. Instead, it is being released in small quantities — about 20,000 bales everyday. Neither the farmers nor the end-users have the cotton, it is now managed by some cotton traders, including global players,” said Venkatachalam

“Trading of cotton should be dispensed with as a short- and long-term solution. We have been suggesting this for a long time. People not connected with the industry are indulging in speculative trade, ” he said.

In the ensuing season, the industry wants Cotton Corporation of India to purchase cotton in bulk from farmers and supply it to mills. It should be advised to not sell the cotton to traders and multinationals.

“CCI was set up to buy cotton from farmers, store it and supply it to the mills with holding charges. In FY22, no cotton was purchased by CCI. This is also one of the reasons why the entire quantity of cotton is available with traders,” he said.

Two-day strike

Meanwhile, a section of textile units in Tirupur, Erode and Salem districts has stopped production as part of a two-day strike against the prevailing high prices of cotton and cotton yarn.

A manifold increase in all costs has also resulted in an increase in yarn prices. Due to the increase in cotton prices, working capital of mills has eroded, resulting in a severe financial crunch, he added.

Yarn price rise

While a particular group of mills in Tamil Nadu had announced a Rs. 40 per kg hike in yarn price with effect from May 1, many mills have maintained prices. “The increase was not implemented universally, either in Tamil Nadu or in other States. Hence, this increase is not a universal price rise,” said another representative.

Meanwhile, Textiles Minister Piyush Goyal met with industry representatives on Tuesday evening on measures to tackle the issue.

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