[20 January 2024, New Delhi] – In a collective effort to address the challenges faced by the Indian cotton textiles and clothing industry, the Confederation of Indian Textile Industry (CITI) and other textile associations representing major users of cotton have submitted a joint memorandum to Shri Piyush Goyal, Hon’ble Minister of Textiles, Government of India. The memorandum highlights concerns related to the Cotton Corporation of India (CCI) Minimum Support Price (MSP) cotton procurement practices and proposes changes to ensure stable prices and smooth supply to the downstream sectors.
The memorandum acknowledges and appreciates the formation of the Textile Advisory Group (TAG) under the chairmanship of Shri. Suresh A Kotak. Under the guidance of Shri Piyush Goyal, various policy initiatives have been undertaken by TAG, including the reconstitution of the MCX Product Advisory Committee and the implementation of the Pilot Project on Cotton master plan, among others.
However, the joint memorandum brings to light the impact of CCI MSP cotton procurement practices on cotton prices, especially when carried out on a large scale. The textile industry emphasizes that the current practices favour multinational cotton traders, leading to speculation in cotton prices that adversely affect the yarn prices and exports of cotton-based textile and clothing products.
Considering the financial stress faced by the MSME spinning segment, the joint memorandum requests Shri Piyush Goyal to take the following measures:
- Commence selling CCI cotton to registered textile/spinning mills from February/March.
- Retain MSP procured cotton as a buffer stock, releasing it based on international price differentials to ensure price stability.
- Announce monthly prices, taking into account MSP procured price, carrying charges, and other incidental charges.
- Extend a uniform free period of 60 days for all actual users.
- Collect a one-time Earnest Money Deposit (EMD) of 10% for advance booking.
- Extend a key loan facility by storing pre-booked cotton at individual mill premises for day-to-day use against payment.
- Sell cotton in multiples of 130 to 150 bales (one truckload) on par with MCX to benefit small spinning mills.
- Establish a Sub-Committee to monitor CCI’s trade practices and prices, taking corrective measures when necessary.
- Facilitate structured financing to CCI/MSME textile units at a priority lending rate.
The joint memorandum emphasizes that adopting these policies would be mutually beneficial for CCI, the Government, and the user industry. It aims to ensure stability in cotton prices, protect the interests of MSMEs, and promote the long-term growth of the Indian cotton textiles and clothing industry.