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 uncertainties 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 distribution in the absence of accurate statistical details on production and consumption. 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 Government 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 decision 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 cotton 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 intensifying the industry’s modernisation and export drive.