The Cotton Corporation of India will do away with the system of bulk discounts for sale of cotton procured under the minimum support price scheme, Union Textile Minister Dayanidhi Maran said on Wednesday.

Speaking to a group of reporters after meeting representatives of the cotton textile industry to review the preparations for cotton procurement by the corporation, he said the Cotton Advisory Board would meet regularly during the peak season, from November to March, to assess the cotton situation continuously, so that there was smooth flow of the raw material to the industry.

The decision to do away with the bulk discounts followed complaints from the industry that the system only helped large traders manipulate the market. Conceding the industry's demand, Agreeing to the demand of the industry, Mr. Maran, however, urged the industry it to ensure that it bought the cotton purchased by the corporation on a regular basis so that the corporation did not incur losses from carrying charges and other such expenses.

Mr. Maran also agreed with the industry's suggestion that the export of cotton be closely monitored so that it was allowed only after taking care of the requirements of the domestic industry and a tab be kept on the corporation's pricing policies and procedures for disposing of procured cotton to protect the interests of the industry.

Meanwhile, Mr. Maran met Prime Minister Manmohan Singh on Tuesday and urged him to ensure that no incentive was provided for cotton export. The meeting followed a letter he had written to Dr. Singh last week.

Cotton exporters have been seeking continuation of the scheme which provided for duty-free scrip at the rate of five per cent for export of the commodity, though the textile industry opposed it, arguing that it made available Indian cotton to spinning mills in other countries at a lower price than in India.

The Department of Commerce operated the scheme till last month, when it was de-notified at the request of the Textile Ministry. Mr. Maran has also taken up the issue with Finance Minister Pranab Mukherjee and Commerce Minister Anand Sharma. “The response of the two Ministers has been quite positive.”

Mr. Maran also agreed to the Industry's request that the corporation open more depots in textile clusters to facilitate the availability of the raw material to the units there.

Four new depots will be opened this year. They will come up in Coimbatore and Madurai in Tamil Nadu, Baddi in Himachal Pradesh and Ludhiana in Punjab.

Mr. Maran said the Tamil Nadu government had already decided to waive VAT on cotton sold through the two depots in the State to help the mills.


Cotton production estimates revised November 16, 2009

Decision on cotton export ban soon November 18, 2009