Stakeholders in the cotton sector here have given their suggestions to a special committee on cotton formed by the Union government.
J. Thulasidharan, president of Indian Cotton Federation, said the committee had a meeting recently in Mumbai to discuss the cotton crisis.
With increase in cotton consumption and steady drop in yield per acre, the present trend of high cotton price and shortage of cotton may continue in the next cotton season that starts in October.
During peak season the value of cotton arrival will be approximately ₹ 1,200 crores a day. Though most of the spinning mills know that cotton prices go up after March, when the peak arrivals (almost 80 %) have ended, they are unable to have more than 40 days stock.
They need financial support to buy more quantity when the arrivals are high. The mills are aware that higher exports lead to shortage in the later months of a cotton season (which starts in October and ends in September) and multi-national and large-scale traders stock substantial quantity of cotton with them.
The solution for this challenge is to provide sufficient finance at low interest and margin to the textile mills well before the season begins. There should be such an announcement in September.
The option of duty free import should be kept open to control abnormal hikes in cotton prices. Duty free import of speciality and extra long staple cotton will not hurt Indian farmers as these varieties are produced only in small quantities in India.
So, the government should look at financial support to textile mills to buy cotton during the initial months of the cotton season and should not impose duty on imports, if there is no such requirement, he said.