The predominantly cotton based textile industry in the country has been facing severe crisis in the recent years mainly due to the volatility in cotton prices which accounts for 60 to 65% of the cost of production. The industry faced worst ever crisis in the history of 150 years during 2010-11 due to abnormal volatility which eroded working capital to the tune of Rs.11,000 crores in three months. One of the main factors contributing price volatility was MSP operations exercised by Cotton Corporation of India (CCI). The MSP operations have been causing damages to both Central Government due to high interest cost, carrying cost, overheads incurred by CCI and also to the industry due to volatility in the prices. Confederation of Indian Textile Industry (CITI) and Southern India Mills’ Association (SIMA) have been insisting the government to introduce Direct Benefit Transfer System in lieu of MSP operations and pay the price difference between MSP and market price directly to the farmers whenever market prices rule below the MSP.
In a Press Release issued recently, Mr.M.Senthilkumar, Chairman, SIMA has thanked the Government, Minister of State for Textiles (Independent Charge), in particular, Mr.Santhoshkumar Gangwar and the Ministry of Textiles for considering the plea made by the association and planning to introduce Direct Payment Deficiency System (DPDS) to help common farmers to get better realization for their produce when the market rates rule below MSP. The Textile Commissioner has announced launching DPDS during the current season at Hingenghat Taluk in Maharashtra on a pilot basis. SIMA Chairman has stated that the operation of DPDS through Agricultural Produce Market Committee (APMC) would greatly benefit the farmers and also the industry. He has stated that during the earlier season, the industry had to pay Rs.2000 to 3000 higher than the regular price for cotton when compared to the international price and particularly mills in Telangana and Andhra Pradesh (cotton producing States) had to source cotton from other States as CCI suspended sale during the cotton season between March and May 2015.
Mr.Senthilkumar has said that China Cotton Reserve Corporation incurred huge losses due to MSP operations and therefore, has introduced Direct Benefit Transfer System from the last cotton season. He has added that DBT system has enabled Chinese spinning sector to source cotton at market prices. He has hoped that similar scenario would soon be created in India and create a win-win strategy for the farmers and the industry apart from reducing losses to the government. SIMA Chairman has requested the Government, particularly the Textile Commissioner foreseeing implementation of the scheme on a pilot basis to design a suitable system and make the scheme successful.