|
The Government has approved an increase in Minimum Support Price ( MSP ) of cotton to the tune of 28.11 per cent for medium staple cotton and 26.16 per cent for long staple cotton for the season 2018-19 . Accordingly , the MSP for medium staple cotton per quintal has been increased from Rs . 4,020 to Rs . 5,150 and in respect of long staple cotton , it has been increased from Rs . 4,320 to Rs . 5,450 per quintal . From 2009-10 to 2017-18 , MSP has increased by Rs . 1,320 per quintal and in 2018- 19 alone , it has been increased by Rs . 1,130 per quintal . So , the impact is going to be huge and possibly unprecedented .
The Government ’ s step will definitely benefit the farmers but at the same time , it would have a negative impact on the Indian textile value chain , as it would increase the clothing cost . It is
|
being said that it might also affect the cotton exports , if Indian cotton prices rule above international prices . Garment manufacturers are already struggling with the increase in cotton yarn prices as there was an increase of Rs . 20 per kg in this month .
Though the trade bodies have welcomed the decision , they have also insisted on a solution that is in the interest of the entire textile industry . “ At one level , the move would certainly increase the income of lakhs of farmers , leading to an increase in domestic consumption that would eventually support the overall Indian economy . However , we need to examine the event from different perspectives and understand that the farmers ’ gain should not adversely impact the US $ 120 billion industry which employs directly and indirectly
|
more than 10 crore people ,” says Sanjay Jain , Chairman , Confederation of Indian Textile Industry ( CITI ). He further added that the Government would devise some direct subsidy route so that interests of both farmers and the largest industrial employers are equally protected for a win-win situation .
The Southern India Mills ’ Association ( SIMA ) is of the view that the Government should exercise cotton MSP operation under Direct Benefit Transfer System ( DBT ) and revamp the role of Cotton Corporation of India so as to benefit the farmers and the industry equally . P . Nataraj , Chairman , SIMA argues , “ Price volatility in cotton prices has often been eroding the working capital and profit margins of the industry and restricting the growth rate between 6 per cent and 8 per cent
|
as against the potential growth rate of 12 per cent to 16 per cent as predicted by many studies .”
The cotton price issue is equally important from the domestic as well as export point of view as India has become the largest cotton producer in the world since 2015-16 , surpassing China and the US and also has become a net exporter of cotton . India accounts for 36 per cent of world cotton acreage by covering 11.80 million hectares and is estimated to produce 6,290 million kgs and export 1,190 million kgs of cotton during the season 2017-18 . Nearly 2.3 crore Indian farmers are currently cultivating cotton . Due to 5 to 10 per cent price advantage when compared to international price , home grown cotton has been the engine of growth for the textile industry .
|
The knitwear garment export sector has started feeling the pinch of hike in cotton yarn price . The segment is going through a tough situation and is finding it difficult to sustain in the competitive global environment , informed Tirupur Exporters ’ Association ( TEA ) President Raja M . Shanmugham . The cotton yarn price witnessed an increase of Rs . 20 per kg this month . The cotton yarn price hike has added to the woes of already struggling segment postimplementation of GST in July last year . The segment has been facing continuous decline in exports on monthly basis as soon as three months ’ transition period got over . Overall , a 21 per cent decline has been reported in knitwear segment |
during the second half yearly period of 2017-18 .
The continuous decline in knitwear exports has started haunting the segment after it reported average 34 per cent decline in the month of April and May this year as well .
The yarn price hike has come at a time when industry has just started getting itself on the track after a lull period of more than a year . In view of the crisis being faced by the sector , TEA President urged textile mills to not increase cotton yarn prices and to not stop supply as well . According to Shanmugham , the crisis-ridden sector would have cascading effect on textile industry .
TEA President also discussed the issues with Union Minister
|
of Textiles Smriti Irani and requested her to mandate the cotton corporation of India to ensure the availability of sufficient quantity , with desired quality of cotton to protect the interest of farmers , textile industry , and also employment . |
Wrong policies of CCI created this situation , stated Shanmugham while discussing the critical situation with K . Phanindra Reddy , Principal Secretary to Government , Ministry of Handloom and Textiles , Government of Tamil Nadu . |