Small Cotton Players In Jeopardy
Of late, the cotton industry in India is experiencing issues regarding cotton exports
. During the cotton season this year, cotton production stood at 3.8 million bales,of whichabout 2.3 million bales have already been booked for export to other countries. This has led to a shortage of the commodity in the domestic market. The industry has demanded a ban on cotton exports as the domestic prices of cotton have soared drastically due to high booking of the commodity for exports by international buyers, says Jagdish Rana, proprietor of Nature Private Limited, a small-sized cotton manufacturing company in Bihar. Meanwhile, the small and mid-sized players who had planned a strategy to manage with the limited cotton production are now experiencing a crisis situation.
Cotton remains a concern
The SME cotton supplying units have always confronted some issue or the other. For instance, in 2008, the minimum support price (MSP) of cotton was hiked; therefore, the SME players were compelled to buy cotton at a 40% higher price. The Cotton Corporation of India (CCI) had procured cotton at high price rates and so the SME players had no other alternative but to increase the price of cotton. Therefore, the CCI had to approach the GoI in order to lower the MSP.
At present, the issue of cotton exports has led to a friction between the Government of India (GoI) and small and mid-sized players in the cotton industry. The latter is of the opinion that the cotton exports should be suspended for the coming months as there is a high demand for cotton in the domestic textile industry. However, according to the GoI, there is enough cotton production in India to cater to the export requirement besides meeting the demand of domestic textile sector.
In the recent past, it has been noticed that the number of export contracts for cotton has risen, thereby igniting stiff competition among small players in the domestic market, says Nirmal Pandey, manager of Ashok Textiles, a small-sized textile manufacturing company in New Delhi. Therefore, the exporters were compelled to cut down on the prices of cotton products in order to maintain a competitive position in the market.
by: David Parks
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