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The Textile Magazine
MAY 2012
Need to end cotton policy uncertainties
The announcement of a draft legislation
framed by the Centre for setting up a system
to collect accurate data on cotton production,
crop yield, domestic consumption, stocks with
stakeholders of the textile industry and on the
surplus cotton available for export has not come
a day too soon. The legislation, if enacted, will
go a long way in ending the nagging uncertain-
ties gripping the cotton economy and the textile
sector caused mainly by the different estimates
of cotton crop and consumption made by the
Textile and Agriculture Ministries as well as
by other related agencies. More often than not,
the Textile Ministry is caught in a dilemma, not
knowing how to effectively handle cotton dis-
tribution in the absence of accurate statistical details on production and con-
sumption. For instance, the ban imposed on cotton export last year on fears of
domestic shortages despite record output lasted only a week. Now, the Textiles
Minister, Mr. Anand Sharma, has gone a step further by stating that the Gov-
ernment has decided on removal of suspension of cotton export registrations
and allowing further export in the marketing year ending 2011-12.
The Government’s erratic and unpredictable cotton and yarn policy was
again to blame for the plight of both cotton growers and spinning mills all over
the country last year. The sudden mid-year allotment of 10 lakh bales of cotton
for export, in addition to the exportable surplus of 55 lakh bales, and the deci-
sion to impose a ceiling of 720 million kg of yarn had had their adverse impact.
In the first case, international traders with huge resources who had bought cot-
ton earlier at throwaway prices and sold them at exorbitantly high prices were
the main beneficiaries and not the growers. In the second, the suspension of
yarn exports, which was of course lifted later, led to heavy losses to thousands
of spinning mills, burdened as they were with growing unsold stocks. They are
yet to recover from the crisis, as well reflected in their mounting debts, and
unless a debt restructuring is announced immediately, their very survival is at
stake.
It may be noted that the restructured Technology Upgradation Fund Scheme
(TUFS), introduced last year, would not merely be in operation in 2012-13 but
would be extended to the 12th Five-Year Plan on the recommendation of the
Government. Meanwhile, textile exports at $34 billion exceeded the target of
$33 billion fixed for 2011-12, thanks to India’s entry into new markets such as
Latin America, Africa and Asian countries. In this emerging scenario, a clear-
cut cotton and yarn policy, if successfully worked out, would help in intensify-
ing the industry’s modernisation and export drive.
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TEXTILE MAGAZINE
THE
R. Natarajan,
Managing Editor & Publisher