International Cotton Sales commences at Tuticorin Port
Tamil Nadu Textile Industry accounts for one-third of cotton textile business and 47% spinning capacity of the country. The spinning mills in Tamil Nadu annually needs around 120 lakh bales of cotton (170 kgs per bale). But, Tamil Nadu produces only around 5 lakh bales of cotton per year and therefore, around 80% of the cotton is procured from Sates like Gujarat, Maharashtra, Telengana, etc., by spending upto Rs.6/- per kilo of cotton and also importing around 15% of the cotton from Africa, US, Australia, etc. Consequent to the removal of cotton from Essential Commodities Act from February 2007, the cotton prices have become highly volatile and are ruling higher than international price during June-September (off season). Hence, the mills’ demand for imported cotton started increasing.
During the last two years, the demand for imported cotton has further increased due to quality issues in the domestic cotton. Only larger mills could import cotton and take advantage due to L/C conditions, financial strength, volume of import, etc. Longer lead time and currency fluctuations affected the mills. The Southern India Mills’ Association (SIMA) has been making several attempts to facilitate coastal movement of cotton to reduce the transport cost and also to create Free Trade Zone (FTZ) facility at Tuticorin and made representations to PMO and Ministry of Shipping (MoS) through Ministry of Textiles (MoT). At the direction of PMO, SIMA and Indian National Ship Owners’ Association (INSA), Tuticorin Port Authorities have made the coastal movement of cotton between Gujarat and Tamil Nadu a success and currently transport around 10 lakh bales of cotton per year. The envisaged volume of around 25 lakh bales of coastal movement could not be reached due to the quality issues erupted in Gujarat cotton during the last two years.
With regard to Free Trade Zone facility at Tuticorin, there was a delay in taking decision. Normally, the international cotton traders bring cotton upto Malaysian port and supply to various Asian countries including India. Hence, SIMA delegation visited Colombo port and sought for transhipment facilities with free ware housing facilities and Colombo port authorities immediately responded positively. When the Ministry of Shipping came to know about this initiative, immediately the Officer on Special Duty in the Ministry of Shipping, Mr Rajagopal Sharma advised SIMA to utilise any port in India and MoS would extend all facilities and support. The Ministry of Shipping convened series of meetings with all the stake holders. Since, creation of FTZ facilities is a time consuming process, the MoS advised to kick-start the facility with transhipment facility. The international traders and industry preferred Tuticorin, though the facilities are also available at Cochin and Chennai ports. Accordingly, Tuticorin port has been provided with transhipment facility to start with for storing around 250 containers of cotton for a period of upto 30 days at free of cost and another 60 days at a discount charge with freedom to sell the cotton either in India or any other country depending upon the demand.
In a press release issued recently, Mr M Senthilkumar, Chairman, The Southern India Mills’ Association (SIMA), has hailed the proactive initiatives taken by NDA government especially the Ministry of Shipping, Tuticorin Port Authorities and Customs Commissionerate as a part of Ease of Doing Business. He has said that the transhipment facility of international cotton would largely benefit the country, bring stability in cotton prices as the imported cotton would be available at demand and also help the mills to prevent losses due to price volatility and also currency fluctuations.
Mr. Senthilkumar has said that the transhipment facility of imported cotton would enable the MSME category spinning mills to have direct and daily access who hitherto had no access. He has added that since the cotton would be made available on a regular basis, the lead time would be reduced to few days from the lead time of 1 to 2 months or even more. He has pointed out that the facility is a historic movement of NDA Government that would strengthen Make in India movement. He has applauded the international cotton traders especially Louis Dreyfus Commodities, Reinhart India Pvt Ltd., Olam International, etc., for their support and cooperation to make this venture a great success. SIMA Chief has highly appreciated Tuticorin Port Trust Chairman who took the responsibility of Nodal Officer in implementing the project and the authorities, the Commissioner, Customs and his officials, and the port terminal operators for their initiatives and support.
The inaugural function held recently at Tuticorin was chaired by Anadha Chandra Bose, Chairman, Tuticorin Port Trust, who declared the facility open for the trade, Mr. K V V G Diwakar, IRS., Commissioner of Customs, Tuticorin was the Guest of Honour, Mr. U Rajendran delivered the welcome address and SIMA Chairman delivered the inaugural address. Mr. Jeyanth Thomas, President, Tuticorin Custom Brokers’ Association, briefed about the standard operational procedures, Mr Guru Radhakrishnan, Managing Director, MTK Textiles Pvt Ltd., a leading Indian agent for cotton trade, delivered the felicitation address. Mr A Illavarasu, Managing Director, S A Anandan Spinning Mills P Ltd delivered the vote of thanks. Special vote of thanks was delivered by Mr Eric Lavenu, Chief Executive Officer, Dhakshan Bharat Gateway Terminal.