The Southern India Mills Association (SIMA) on Thursday expressed shock over the decision of the Group of Ministers (GoM) to increase the cotton export ceiling to 65 lakh bales from 55 lakh bales for the season 2010-11.
In a statement issued in New Delhi, SIMA chairman, J. Thualsidharan said the announcement came as a shock for the cotton textile industry which has been facing worst ever crisis during the past several decades.
He said the textile industry has been ailing forcing it to cut down its production by 35 per cent to adjust the supply-demand mismatch caused due to lopsided policies of the government. He pointed to the premature announcement made on cotton export and also the suspension of cotton yarn export between January and March 2011 resulting in huge accumulation of yarn stocks.
Mr.Thulasidharan said in 2009-10, the same GoM had promised that a minimum of 50 lakh bales would be ensured as closing stock after taking into account the domestic consumption. The Cotton Advisory Board (CAB) has already estimated a closing stock of 27.5 lakh bales after earmarking 55 lakh bales for export and very conservative domestic cotton consumption.
He said the Agriculture Ministry has over estimated the cotton production as 339 lakh bales as against the CAB estimate of 312 lakh bales. “The main strength of cotton yarn manufacturing countries such as China and others is comfortable stock to use ratio. The Indian spinning sector was doing very well during the period 2003-2007 when there was a stability and parity between the cotton and yarn prices,’’ he remarked.
He warned the shortage of cotton for the domestic industry would again shoot up the cotton prices resulting in further glut in the market and abnormal losses not only to the spinning mills but also to all the sectors across the value chain.
