India’s textile industry plans to meet Piyush Goyal
The meeting was called at a time when the voice of the industry is growing louder to ban the export of cotton. In Tiruppur and other parts of Tamil Nadu, garment units and other stakeholders have issued an ultimatum to go on strike due to the indiscriminate rise in cotton prices. Recently, Textiles Secretary Upendra Prasad Singh told the media that the government would take a decision in the general interest of the entire textile industry.
As cotton prices are likely to hit ₹100,000 per 356kg candy in the domestic market, India’s textile industry is geared towards the meeting proposed by Textiles Minister Piyush Goyal to discuss how the industry can face the challenges of exorbitant prices. of cotton and cotton yarn over the next five months of the current season.
Industry experts have said that if the government agrees to the request for a cotton export ban, prices could drop slightly due to selling by dealers and multinationals. Cotton Corporation of India (CCI) is unable to cool prices by selling its cotton stock, which is not enough. Therefore, the next five months of the current season will be very difficult for the textile sector until the arrival of the new harvest in October.
Ludhiana-based yarn trader Ashok Singhal told Fibre2Fashion, “The removal of import duties on cotton has not lowered prices. But the cotton export ban may bring some relief, as multinationals and other dealers will have to liquidate stocks they held with them to sell at even higher prices. He said banning cotton exports is the only option that can give some respite from high prices.
“Our competitor countries benefit from the export of cotton,” said Raja M Shanmugam, Chairman, Tiruppur Exporters Association (TEA). He suggested that cotton be brought under the Essential Commodities Act so that unnecessary hoarding can be controlled. He informed that TEA and other industrial organizations based in Tamil Nadu have called for a five-day strike from June 16. They demand a complete ban on the export of cotton and also impose the necessary restrictions on the export of cotton yarn.
Mumbai Based Broker BN Ladda said banning the export of cotton yarn is the only option to cool prices, but Purushottam Gupta, trader based in Tiruppur argued that such a move might not bring much relief to the industry. This is because spinning mills also add value to the production of yarn from cotton. According to Gupta, previously, whenever restrictions were imposed on the export of yarn, it did not have a positive impact on the industry.
It should be noted that Cotton Corporation of India (CCI) has not purchased cotton during the current season as prices have remained above the minimum support price (MSP). CCI cannot cool the prices by selling its stock because according to the market estimate, CCI has a stock of around 10 lakh bales (170 kg per bale). But the real problem is that this stock is made up of years-old cotton, which cannot meet the needs of the industry due to its poor quality.
In April, the Cotton Association of India (CAI) had further reduced domestic cotton production to 335.13 lakh bales. From October 2021 to March 2022, 343.68 lakh bales of cotton were supplied to the Indian market, including 75 lakh bales of opening stock and 6 lakh bales of import. In the first six months of the season (October 2021 to March 2022), 175,000 bales of cotton were consumed by the industry. Apart from this, 35 lakh bales of cotton were exported. Thus, 133.68 lakh bales of cotton remained at the end of March. Of this, the stock of 75 lakh bales of cotton is with the mills. The remaining 58.68 lakh bales are stored with multinationals, ginners, traders, commodity exchanges, ICC and Federation of Maharashtra. CAI estimates that the total consumption of the textile industry is expected to drop from 335 lakh bales to 340 lakh bales for the whole season.
Cotton prices are also currently at a higher level on the international market. According to the International Cotton Advisory Committee (ICCC), world cotton production is estimated at 26.44 million tons in 2021-22. Last year’s global production was 24.32 million tonnes. World cotton production fell last year from 2019-20’s production of 26.13 million tonnes. World consumption is estimated at 25.62 million tonnes in 2021-22 compared to 25.66 million tonnes in 2020-21. Cotton consumption increased last year from 22.69 million tonnes in 2019-20. Therefore, lower production and higher consumption had driven cotton prices over the past year and a half in the international market.
Commodity analysts said the U.S. ban on cotton and its products from China’s Xinjiang region and aggressive buying by commodity funds also boosted global prices. After cotton was banned from the Xinjiang region, countries like Bangladesh, Malaysia, Indonesia, and Turkey started importing cotton from other countries. There are fears that unfavorable weather conditions could damage production prospects for the coming season. Dry weather in cotton-growing areas of the United States also fueled ICE cotton.
Fibre2Fashion Information Office (KUL)