The predominantly cotton-based Indian textile industry has been facing challenges after removing cotton from the Essential Commodities Act in February 2007 due to price volatility. Cotton futures trading on the MCX platform was also often affecting cotton prices which had a severe impact on the performance of the textile industry, especially during the last few years. In order to mitigate the challenges, the Union Minister of Textiles, Piyush Goyal had constituted a Textile Advisory Group under the Chairmanship of Suresh.A.Kotak and so far conducted five meetings.
The Minister had taken several initiatives to address the issues relating to cotton. Under his direction, the MCX Cotton Product Advisory Committee was reconstituted with the whole textile value chain so as to enable the MCX platform to benefit all the stakeholders and also curtain speculation.
Based on the recommendations made by the Product Advisory Committee and on the approval of SEBI, MCX launched the new contract on 13th February 2023. The MCX conducted its maidan Workshop to create awareness among the stakeholders on 27th February 2023 at The Residency Hotel, Coimbatore, in which Ravi Sam, Chairman, SIMA, Rajkumar, Chairman, CITI, Nishant Asher, Honorary Secretary, Indian Cotton Federation addressed in the event. Aravind, Corporate Hedging Consultant, Badruddin Khan, Assistant Vice-President, MCX and Ganasekar Thiagarajan, Director, Commtrendz Research have made presentations on cotton hedging and cotton contract specifications respectively.
Chairman of CITI and Chairman of Product Advisory Committee of MCX, Rajkumar and SIMA Chairman, Ravi Sam stated that the revised cotton contract specifications have taken into account the various concerns of the stakeholders like farmers, ginners, traders, spinning mills and downstream sectors in the entire textile value chain including readymade garments.
They added that the volume of business on the MCX platform was only around three lakh bales as against the industry consumption of 300 to 320 lakh bales and the country’s cotton production of 340 – 360 lakh bales per year.
They further said that New York Cotton Futures and Chinese cotton futures had over 80 to 90% of physical transactions. They thanked the Government for the intervention and for revamping the Product Advisory Committee and cotton specifications.