Association Seeks Standard Contract for Indian Cotton

Anything that can increase contract sanctity and security will be a very welcome development in today’s cotton industry, so the announcement that the Indian Cotton Federation (ICF, formerly the South Indian Cotton Association) is working on a standard contract for Indian cotton is drawing a lot of interest.

The impetus behind the decision to standardize the contracts was the incredible price volatility that’s occurred in the past year, which led to an untold number of defaults around the world. In India, the volume of defaults in the private trade alone is estimated to be as many as 600,000 bales of cotton.

The contract will have different versions, depending on whether the deal is domestic or international. That allows the contract to be more customized to the specifics of the market to which it applies, according to ICF President J Thulasidharan. Arbitration on the contract, should it become necessary, would be handled by Indian Council of Arbitration. While the initial contracts are being created by ICF leadership, other regional associations and applicable stakeholders will be consulted before a final version is developed.