00 ItMa 2011 (exclusive Feature) - Textile Magazine

industry news
siMA seeks revised cotton trade
policy for textile industry revival
the predominantly cottonbased
indian textile industry
has incurred a loss of
over rs. 15,000 crores
in the current financial
year due to high volatility
in cotton and yarn prices.
even the best managed
textile companies are incurring
huge cash losses.
the same is the case with
synthetic fibre manufacturers
who maintain parity
with cotton prices. A levy
of 10 per cent on branded
readymade garments and
made-ups and duty-free
access agreement entered
into with Bangladesh have
added to the woes of the
textile industry.
18 | ThE TEXTILE MAGAZINE OCTOBER 2011
Mr. S. DInAKARAn, SIMA Chairman
The industry has appealed for a
financial relief package for its survival.
The Minister of Commerce,
Industry and Textiles convened a
meeting of all stakeholders to assess
the gravity of the problem facing the
industry. On the occasion, CITI and
SIMA appealed to the Minister to
ensure raw material price stability
and a level playing field in respect of
pricing and cost of funding in view
of the stiff challenges from competing
countries in the open market.
Mr. S. Dinakaran, SIMA Chairman,
has proposed a freight equalization
tax of Rs. 2,500 per tonne
on cotton export, as the mills in the
south spend more on transportation
than those in China, Bangladesh and
other competing countries. They
have to procure more than 75 per
cent of cotton from far-off places
like Gujarat and Maharashtra. The
cotton transportation cost has gone
up due to an abnormal increase
in diesel prices.
According to him, mills in
China, Bangladesh and other
rival countries are able to carry
the raw cotton in foreign vessel
through the sea route and thus
are able to transport cotton at
less than 40 per cent of the transportation
cost as compared to
mills in south India.
Further, textile mills in Tamil
Nadu that consume 47 per cent
of the cotton grown in the country
produce less than three per
cent of their requirement.
Mr. Dinakaran has suggested
that the cotton export policy be
framed in such a way that the neighbouring
countries do not derive the
competitive advantage. Parliament
has already passed a Bill to levy up
to Rs. 10,000 per tonne so as to have
a level playing field in marketing.
Cotton prices started soaring in
the last few days, while yarn prices
are moving down in certain markets,
particularly for fine and superfine
varieties. In fact, cotton prices have
moved up by Rs. 1,000 per candy of
355 kg as cotton exporters are covering
a huge volume in the hope that
they might get export incentive for
export. At this rate, it is feared that
cotton prices would go below MSP
and farmers might get affected.
Mr. Dinakaran has urged the Government
to take a fair view of the
industry plight considering that over
92 million jobs and over Rs. 2 trillion
investments are at stake. w