The Government asked to fix minimum export price for cotton
Producing yarn at nominal conversion charges suggested
COIMBATORE: The Southern India Mills’ Association has appealed to the Union Government to announce an interim cotton policy.
Association chairman J. Thulasidharan has said in a release that the policy would sustain the competitiveness of the entire textile value chain. The policy should levy 10 per cent cess on cotton exports. The Government should also impose five per cent Earnest Money Deposit for cotton export registration and reduce the validity period for export contracts to 30 days, without extension facilities.
The Government should fix a minimum export price for cotton and streamline cotton export and import through the Cotton Corporation of India. It should extend competitive working capital assistance for cotton purchase at seven per cent interest, 10 per cent margin money and nine months credit limit.
Further, Mr. Thulasidharan said the spinning sector was ready to produce yarn at nominal conversion charges if the cotton was supplied by the yarn buyers.
During the last five months, the domestic textile industry had been seeking the Government’s intervention to calibrate cotton exports as it anticipated global cotton shortage. The spinning sector was not in a position to completely pass on the increase in cotton prices to the domestic handloom, powerloom and garmenting units. For major cotton varieties such as Shankar 6, the prices had gone up by Rs.26 a kg. However, the yarn prices were increased by only Rs.12 a kg.
According to a study conducted by the South India Textile Research Association recently, the textile mills in Tamil Nadu incurred seven per cent to 11 per cent net loss because of the cotton cost and the power shortage in Tamil Nadu, Mr. Thulasidharan said.
With the global economy recovering and the government trying to address the power shortage, the capacity utilisation in the mills was expected to go up this year.