Indian Government to Sell Cotton Stock

The Government of India has directed the Cotton Corporation of India (CCI) to sell its entire cotton balance stock to offset the abnormal price rise.

Indian mills are importing cotton predominantly from African countries to sort out the current crisis situation.

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CCI has been directed to sell its stock to micro, small medium scale (MSME) spinning units. CCI will sell the cotton it procured through the minimum support price scheme to domestic MSME spinning units.

Leading spinning associations such as the Coimbatore-based Southern India Mills’ Association (SIMA) have thanked the Ministry of Textiles, India for acceding to its request to support the spinning industry. Based on the current situation, SIMA hopes that the government in future will sell only to domestic end-users such as spinning units and not to international marketing companies.

In the present situation, spinning mills are facing crisis, as they have excess capacity due to a lack of yarn exports to China and an abnormal price rise in the recent three months.

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In a telephone conversation, a general manager of a leading cotton spinning mill in Aruppukottai, South India, stated that China is not importing coarse count yarns. Adding to this problem, cotton price has increased, mostly due to stockpiling which has artificially inflated the price in the domestic market.

Another source stated that the landed price of imported cotton is six rupees per kilogram less than the domestic price. Given that rainfall has been generally good in most parts of the country, this price rise is not justifiable, according to the source.

Mr. M. Senthilkumar, chairman of SIMA, stated that in the next three months, cotton imports may well exceed 1.5 million bales (170 Kgs each), as mills have contracted with companies from Australia and African countries. This is a significant development, given that India became a leading cotton producing country recently.

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