The Indian textile industry has been facing the worst ever crisis in the history during the last two years mainly due to the abnormal increase in cotton prices and the monopolistic roles played by the multinational and leading cotton traders in the country. Consequent to the removal of the cotton textiles from the Essential Commodities Act as a part of liberalization the multinational cotton traders started dominating in the Indian market during the last two years. These traders are flooded with cheap funds and are able to cover large volume of cotton and speculate the prices.  In addition, the trader-friendly policies announced by the Government during the last two years have further strengthened their hands and seriously affected the entire textile industry throwing several lakhs of people out of jobs.  Though the country has been achieving record crop during the last two years which is likely to continue in the current season also, this has benefited only the traders. During the current season, the traders are covering major portion of good quality cotton for exports and therefore, the domestic industry is not able to procure the required cotton.  Normally, the cotton prices would come down by at least Rs.1,000 to Rs.1,500 per candy during October-November when compared to September. But during the current season, the cotton price has already gone up by almost Rs.2,000 per candy when compared to September price.  The prices for standard varieties like Shankar-6 have already exceeded Rs.25,000 per candy as against Rs.22,600 prevailed during September 2009.

            In a press release issued here today, Mr.J.Thulasidharan, Chairman, The Southern India Mills’ Association (SIMA),  has appealed to the Central Government to immediately ban cotton export and stop registering any cotton for export purpose considering the grave situation.  Mr.Thulasidharan has said that the monsoon failure and floods in few cotton growing States have considerably affected the cotton production and the actual production might be only around 260 lakh bales as against 290 lakh bales produced during the last year. He has further said that only around 150 – 160 lakh bales  would be of good and above average quality cotton. SIMA Chairman has cautioned that if these quality cotton are allowed for export, the domestic industry which need around 240 lakh bales would end up with all substandard and inferior quality cotton but would be compelled to pay the price of good quality cotton and also depend on imported cotton to meet the customer requirements.    

            Mr.Thulasidharan has said that the textile industry in South India which accounts for almost 50% of the spinning capacity in the country is incurring 5% additional cost towards transport, taxes, insurance etc., when compared to any destination in far east countries which are able to source cotton from India.  SIMA Chairman has reiterated that the industry has been pleading the Central Government to provide working capital at a competitive cost to have a level playing field with the multinational cotton traders who are able to get any amount of fund at 3% to 4% interest rate, but the Government is yet to take any decision on this front.

            SIMA Chairman has pointed out that the Indian economy largely depends on the cotton farmers and the textile industry and therefore, the Government should take care of the interest of both the segments. The cotton farmer has already been protected by the Government with over 43% hike in the Minimum Support Prices announced during last year. The cotton textile industry was not only neglected but also saddled with high cotton cost, miserably failed to compete with the multinational cotton traders during the peak season and ultimately end up paying very high prices from the same traders even for the domestic requirement. Mr.Thulasidharan has stated that over 18 lakh bales of new crop has already been covered by a few large traders for export which has skyrocketed the domestic cotton prices in a week’s time.

            SIMA Chief has stated that the Government should take necessary steps on a war footing basis for the mutual benefit of the cotton farmers and as well as the predominantly cotton based textile industry which employs over 90 million people directly and indirectly. He has further said that 1 lakh cotton bales would provide employment to 60,000 people and therefore, all good and above average quality cotton should be converted into finished goods and exported which would increase the foreign exchange earnings several times.   Therefore, SIMA Chairman has appealed to the Central Government to immediately ban cotton export and stop registering any further quantity for exports so as to sustain the livelihood of several million people employed in the industry.