By Jayashree Bhosale | ET Bureau|
Jan 15, 2020
Cotton Corporation of India (CCI) chairman P Alii Rani has said the textile industry should not expect the company to sell cotton at a loss just because it is a government enterprise. CCI has so far bought 25% of the cotton that has arrived in the markets this year since the beginning of the cotton year on October 1.
The remark comes after South Indian Mills Association (SIMA) urged the textile minister to instruct CCI to sell the cotton at market price so that spinning mills can procure the cotton at a competitive rate. Mill owners have complained that the price of Rs 46,000 per candy (of 356 kg each) quoted by the CCI is too high.
“As CCI has bought most of the best quality cotton that has arrived in the market, the present ruling market price is that of the second-grade cotton, which cannot be compared with CCI's best quality cotton,” Rani said, referring to the market price of Rs 40,000 per candy.
According to Rani, CCI has been buying the best quality cotton. “Currently, we are buying about 50% of the cotton arriving in the market. Naturally, our pricing is based on value. It will be unfair for the industry to expect that the best quality cotton should become available to them at the price of the second-grade cotton just because we are a government company. We do not want to sell the cotton at a loss and burden the taxpayers."
Ashwin Chandran, chairman of SIMA, alleged that the trading policy of CCI often aggravates a bad market condition. However, CCI has denied this. "CCI has not been hoarding cotton. We have been auctioning cotton on a daily basis. However, the industry has come together and decided not to participate in our tendering process as they do NOT want to pay the price that we have set," said Rani.
According to her, the small and cooperative mills have been buying from CCI, but the big mills have not been participating in CCI’s tenders. CCI could sell only 200,000 bales of the 1.1 million bales it had procured in the previous cotton year. This year, it has so far procured 3.8 million bales of 170 kg each from markets, where the prices were ruling below the minimum support price (MSP). CCI has not conducted any commercial operations this year and has restricted to only MSP operations.
Mill operators are of the view that if exports continue to increase, it can create a panic-like situation in the domestic market. "The China-US trade war is likely to end. China had depleted its cotton reserves significantly during the last few years. China has geared up to import huge volumes of cotton from USA and India (the largest cotton producing countries in the world).
As per market information, over 20 lakh bales of cotton have already been exported from the current cotton crop and export might reach the level of 60 lakh bales, as against 50 lakh bales estimated by CAB. If the trend continues, it may result in panic situation in the Indian cotton market," said Ashwin. (Source: Economic Times)