SIMA shocked at increase in ceiling for cotton exports
The Southern India Mills Association (SIMA) has expressed shock over the decision of the Group of Ministers (GoM) to increase the cotton export ceiling to 6.5 million bales from 5.5 million bales for the season 2010-11.
In a statement issued in New Delhi, SIMA chairman, J. Thualsidharan said the announcement came as a shock for the cotton textile industry which has been its facing worst ever crisis during the past several decades.
He said the textile industry has been ailing, forcing it to cut down its production by 35% to adjust the supply-demand mismatch caused due to lopsided policies of the government. He pointed to the premature announcement made on cotton export and also the suspension of cotton yarn export between January and March 2011 resulting in huge accumulation of yarn stocks.
Mr Thulasidharan said in 2009-10, the same GoM had promised that a minimum of 5 million bales would be ensured as closing stock after taking into account the domestic consumption. “The main strength of cotton yarn manufacturing countries such as China and others is comfortable stock to use ratio,” he said. “The Indian spinning sector was doing very well during the period 2003-2007 when there was a stability and parity between the cotton and yarn prices.”
He warned the shortage of cotton for the domestic industry would again shoot up the cotton prices resulting in further glut in the market and abnormal losses not only to the spinning mills but also to all the sectors across the value chain.
