Complaining that that ``speculation’’ by a few large international cotton traders was leading to a steep hike in cotton prices in the Indian market, the Confederation of Indian Textile Industry has called for an immediate suspension of cotton exports upto March 2010 to ensure that adequate quantity of cotton was available to the textile industry at competitive prices.
``The real driver for the price escalation was speculation by cotton traders, especially a few large international players who were operating in the Indian market on the strength of highly competitive capital available to them from global sources’’, said CITI Chairman, Shishir Jaipuria.
Pointing out that the prices for standard varieties like Shankar 6 has already crossed Rs. 25,000 per candy on spot basis and the trend of price increases continues despite significant increase in arrivals in the market in the last couple of weeks, he said, ``according to market information, more than 15 lakh bales of the new crop have already been bought by these large traders for export’’.
Noting that even as cotton production was expected to be substantially lower than the 305 lakh bales estimated by the Cotton Advisory Board in view of recent rains, the industry was hoping for a significant increase in cotton consumption due to slow but steady improvements in the economics of US, Europe, Japan and other countries, he said under the circumstances there may not be any surplus cotton for exports this year.
``If large exports take place at this stage, the best of our cotton will go to our competing countries and the domestic industry will suffer both in terms of quantity and quality of cotton during the rest of the year’’
The Government, he said, must announce a suspension of the cotton exports for the next three months. The situation may be reviewed in early February, when the situation would become clearer.
The textile industry is on the verge of a recovery after two years of unprecedented crisis. However, at the current cotton prices, Indian textile products would increasingly become uncompetitive in the global market. There was a need to maintain a healthy stock to use ratio, he said.