The global cotton scenario has been facing an unprecedented challenge as the international price has been increasing exponentially since the beginning of September 2021. The Indian cotton price (Sankar-6) that prevailed at Rs.55,000/- per candy during beginning of September 2021 has now increased to Rs.67,000/- per candy.
Ravi Sam, Chairman, The Southern India Mills’ Association (SIMA), said that the continuous increase in the cotton prices and consequently the yarn prices is causing havoc for the exporters to meet their long term commitments. He has added that with continuing uncertainties, the exporters are finding it difficult to confirm long term orders.
SIMA Chairman has stated that various policy initiatives taken by Government of India especially the extension of RoSCTL benefit for the garments and made-ups till March 2024 and inclusion of yarns, fabrics and other products under RoDTEP have enabled the industry to improve their global competitiveness and marching towards achieving the vision set by the Government to reach US $ 44 billion textiles & clothing exports by March 2022.
Under these circumstances, it is essential for the Government to intervene in the cotton policies and create a level playing field by removing the import duty on cotton, says Ravi Sam. He has said that this would change the cotton market sentiment to a certain extent.
Yarn Price Increase by Few Mills:
While commenting on the recent yarn price increase by few spinning mills manufacturing hosiery yarn in Tamil Nadu, SIMA Chairman has stated that these mills had not increased the yarn price for the past three months though the cotton price has increased over Rs.12,000 per candy during the same period that enabled the knitted garment exporters to meet their commitments and also perform well. Though these mills were hoping for reduction in cotton prices to maintain the same yarn price, but the continuous spurt in cotton prices have forced these mills to increase the yarn price by around Rs.50/- per kg, despite the clean cotton cost has increased by Rs.60/- per kg.
Diwali Season and Stability:
SIMA chief has stated that the anticipated bulk arrival of cotton in the post-Diwali would certainly force the market to reduce the cotton price that would have an impact on yarn price. He has said that such a drop in cotton and yarn prices and stability of the same could be seen only when the industry avoids panic buying of cotton and yarn for the next 15 to 20 days.
He has advised the spinning mills to be very cautious and extend full cooperation to the downstream sectors so that the country could continue to get the increased demand opportunities thrown by both domestic and international markets. He has stated that the industry could mitigate such a precarious situation from December 2021 to March 2022 by standing united. He has appealed to the downstream sector and the spinning sector to extend similar cooperation to enable the industry to alleviate the present challenge and tide over the crisis.