New Delhi, June 28 (Inditop.com) The textile industry can heave a sigh of relief as the government plans to make available cotton at international prices that are 10-15 percent lower than the domestic cost of the fibre.
Textiles Minister Dayanidhi Maran said that though paying the minimum support price (MSP) is an obligation which the country owes to the farmers, the textile industry will be insulated from the high cost.
“MSP is a must. But we will sell cotton (to the textile industry) at (lower) international prices,” Maran told IANS in an interview.
The MSP is the price at which the government procures cotton from farmers in order to insulate them from fluctuating prices.
Last year, while international prices were low, domestic prices zoomed following a 40 percent hike in the MSP. This deterred traders and exporters from purchasing it.
“There are some issues with cotton, which was partially due to the high MSP paid to farmers, but that is part of the social obligation which the country owes to the farming community,” Maran said.
According to Cotlook A index, the universally accepted index for global cotton prices, the price of cotton on May 22 was 62.25 cents per pound. Against this, Shankar-6, the most popular variety of Indian cotton, was ruling at 66.38 cents per pound.
“But we have tried to strike a balance,” Maran said, adding: “Industry also has not picked up the way we wanted it to, some mistakes do happen, but in future we will try to ensure such things do not happen.”
According to him, “there are a lot of factors that come into play”, for instance, the monsoons. “We are waiting for the rains,” he said.
The new textiles minister, who held the telecommunications portfolio for a brief while in the previous United Progressive Alliance (UPA) government, said he wanted to replicate the “telecom model” to attract foreign investment in the textiles sector.
“We need to duplicate what we did in the telecom sector – ask the multinational firms to come to India, manufacture here and sell here. They would not only make money for themselves but also create jobs,” he said.
“We have to meet people from the six-seven countries that have shown interest in this sector.”
He said that on a personal level, he would try to facilitate better incentives for these companies in association with the state governments.
While the ministry has been pushing for new overseas markets, Maran admitted it was tough to substitute the US and the EU countries, which together account for 60 percent of India’s textiles exports.
“Indian manufacturers have put all the emphasis in one basket, which is the US and EU,” he said.
“In the short term, we can do nothing more than giving the industry tax incentives and duty drawbacks. But even if the government gives whatever they ask for, if they have no orders what use will these concessions be?”
However, the minister said he hoped the situation would start looking up in next six months for the slowdown-hit textiles sector.
“I hope the gloom goes out in six months. The third quarter will give us the right indicators.”
Exporters will receive the final orders for Christmas by July-September, which will determine their fate.
“I’m more worried about the third quarter. This quarter is very important for the textiles sector as it get orders for the Christmas season around this time. Whether the incentives given by the finance ministry will be of any use will be determined by this quarter,” Maran maintained.
