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THE TEXTILE MAGAZINE
AUGUST 2011
The predominantly cotton-based
textile industry providing direct and
indirect employment to over 90 mil-
lion people is the single largest em-
ployment provider, next only to ag-
riculture. The industry has invested
over Rs. 2 lakh crores during the
last decade and created new jobs for
over 10 million people, fetching 17
per cent of foreign exchange earn-
ings for the country.
The cotton textile industry was
performing extremely well during
2003-2007, and investments were
doubling year on year mainly due to
the advantage of home-grown cot-
ton. The price stability of cotton
and cotton yarn during this period
enabled the different segments of
the textile industry, right from cotton
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win-win situation and assured rea-
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problem started with the removal
of cotton textiles from the Essen-
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2008. This enabled multinational cot-
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ligible interest rate, to dominate the
Indian cotton economy and indulge
in price speculation.
Taking advantage of cotton under
Open General Licence and 14 per
cent import duty on cotton, multina-
tional cotton traders exported over 30
lakh bales of cotton in excess of the
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visory Board during the cotton sea-
son 2007-08, leaving a closing stock
of 35 lakh bales and a stock-to-use
ratio of 15 per cent as against the in-
ternational level of 40 to 50 per cent.
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Pakistan, Bangladesh, etc., were able
to source Indian cotton at 20 per cent
cheaper price when compared to the
Indian mills owing to import duty,
DEPB / drawback extended for cot-
ton and cheaper means of transport
through foreign vessel.
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time in history had to observe a one-
day production stoppage on July 9,
2008, to press the Government to
remove 14 per cent import duty and
one per cent duty drawback given for
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However, the bank interest rate which
was 7.5 per cent in 2007 started hard-
ening and reached almost 15 per cent.
Indian spinning mills, predominantly
small and medium sized in nature; do
not have direct access to imported
Cotton export under OGL: SIMA
appeal for level playing field
cotton, hedging facilities, and cheap-
er funds, and also cannot handle the
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ton Association. And they face the
working capital constraints due to
25 per cent margin money and three
months credit limit at 15 per cent in-
terest rate.
In a press release, Mr. J. Thula-
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dia Mills’ Association (SIMA), has
appealed to the Prime Minister to
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Indian cotton textile mills before
taking a decision on allowing cotton
export under OGL in the long run.
He has stated that the Empowered
Group of Ministers had promised to
ensure 2½ months closing stock for
the cotton season 2009-10 which was
not implemented.
He said the industry has been de-
manding working capital assistance
at 7 per cent interest rate with 10 per
cent margin money and up to nine
months credit limit to enable Indian
mills to procure cotton during the
peak season (December-March) and
compete with multinational cotton
traders.
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ration has been fully protecting the in-
terest of its spinning sector by main-
taining adequate buffer stock and also
does not permit any external agency
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Indian Government policy has to take
care of ‘aam admi’ and ensure that the
people below the poverty line source
their clothing at affordable cost.
Mr. J. THULASIDHARAN
SIMA Chairman
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