In a bid to bail out the textile industry, the Government plans to build a strategic reserve of cotton to secure supplies for mills. The reserve will ensure raw material supplies to mills and help stabilise prices in times of shortage.
According to a proposal by the Textile Ministry, State-run Cotton Corporation of India (CCI) will be directed to build up a reserve of 2.5 million bales (of 170 kg each) of cotton till the cotton arrivals begin for new season. CCI is likely to procure around 10 lakh bales a month from growers for the next two months at market prices instead of minimum support prices, thus making the proposal attractive to farmers too.
“This (the cotton reserve) comes as a boost to us at a time when we are suffering because of labour issues, burdened by debt and intense competition from exporters to secure the raw material. Cash-strapped Indian mills lose out the most when raw material prices zoom and unbridled exports trigger irrational price hikes,” said Mr P.D. Damodaran, former Chairman, The Southern India Mills’ Association.