The textile industry has requested the government to put in place a delivery mechanism for the industry, reeling under the pressure due to various reasons, for getting the raw material at reasonable rates.
While welcoming the 28% hike in minimum support price (MSP) of cotton to ensure farmers get at least 50% profit of their actual cost of production, the Confederation of Indian Textile Industry (CITI) cited that at one level the move would certainly increase farmers’ income, leading to an increase in domestic consumption that would eventually support the overall Indian economy. However, it stated the is need to examine the event from different perspectives and understand that the lakhs of farmers gain should not impact the $120 billion industry which employs more than 10 crore people directly and indirectly.
From 2009-10 to 2017-18, the MSP increased by Rs 1,320/quintal and in 2018-19, it has been increased by Rs 1,130/quintal. The impact is huge and possibly unprecedented. The textile & clothing being an integrated industry, the proposed hike in MSP based on 1.5 times the A2+FL costs would impact each segment along the supply chain raising the final price of the product, said Sanjay K Jain, chairman, CITI. Jain pointed out that higher MSP would further compel huge cotton procurement by the state-run Cotton Corporation of India (CCI).
In the past, for instance, the Centre raised cotton MSP (medium staple) by a record 39% in 2008-09, driving up CCI’s procurement to an all-time-high of 8.9 million bales. Industry hopes that a clear CCI policy is spelt out, so that in case it needs to make a massive procurement, the industry gets regular offering from them throughout the season at international parity prices (system linking offered prices to ICE may be formulated).
