Restore ban on cotton export till next season: Industry.

Chennai: The Southern India Mills Association (SIMA) has urged the government to immediately revoke the decision of permitting cotton export and suspend it till the next season in the interest of several million people employed in the predominantly cotton based textile industry.

In a statement, J Thulasidharan, chairman of the association said the removal of suspension of cotton exports has come as a rude shock to the industry. The decision would result in closure of spinning mills for a period of two to three months for want of cotton.

Small and medium spinning mills are already reeling under crisis due to acute power shortage, high transportation cost, hardening of bank interest rates, high labour cost,etc. This move would also further increase the prices of yarn putting lot of hardships on the exporters of garment, handloom and powerloom sectors.

Several industry associations made requests to calibrate cotton exports from the season beginning, and after paying attention to the industry. The government suspended cotton exports after allowing a registration of 85.22 lakh bales as on April 30, 2010 and allowing a shipment of 73.79 lakh bales as against the CAB earmarked quantity of 55 lakhs bales.

“When the group of Union ministers in their meeting decided to suspend cotton export till September 2010, how the government could take all of a sudden a “U” turn on its decision and free raw cotton export neglecting the interests of domestic industry”, he said.

He said, it is said that the closing stock for the cotton season 2008-09 was 71.5 lakh bales and the stock-to-use ratio was at 31.2%. This was comfortable for the industry to have a stability in the cotton prices and maintain parity with the yarn prices. But, if the government removes the suspension of cotton exports, the stock level would come down by another 11.5 lakh bales depleting all the usable cotton leaving a closing stock of 35 lakh bales. The stock-to-use ratio would then be 14%,which is the lowest stock level maintained by the country in the recent past, he said. Countries like China always ensure minimum 30% to 35% stock-to-use ratio to ensure smooth supply to the industry and also maintain cotton prices at competitive rates, he added.

Thulasidharan cautioned that the thin stock-to-use ratio would create serious problems in the forthcoming season and the cotton prices...

Source : Financial Express