COIMBATORE: The Central Government should evolve a mechanism for declaration of cotton stocks by ginning and pressing factories, traders and Government agencies, according to B.K. Patodia former chairman of the Southern India Mills’ Association.
With cotton exports estimated to be about 85 lakh bales this year (October-September), prices have shot up in the domestic market. The Cotton Advisory Board estimates the closing stock to be 43 lakh bales.
With consumption likely to be 241 lakh bales, the “stock-to-use ratio” thus works out to just 18 per cent.
However, the stock-to-use ratio at the global level is over 42 per cent and over 30 in the competing countries such as China, Pakistan and Turkey.
One of the main reasons for cotton prices to soar in the domestic market this year is the low stock-to-use ratio. The closing stock should be at least three months’ cotton consumption, he says. Hence, cotton exports should not be more than 20 per cent of the cotton crop.
By exporting cotton at relatively low prices, the Indian exporters are subsidising foreign buyers and “this is not in the interest of the Indian cotton economy,” he says.
The textile mills have been declaring cotton stocks held by them every month. The Government should also empower the Textile Commissioner to register contracts for cotton export and import.
Total cotton exports should be less than 20 per cent of the production.
The domestic textile sector’s production, employment and foreign exchange will be hit if the Government did not act on some of these demands at the earliest.