Government to ensure cotton security

The South India Spinners Association has appealed to the Union Government to permit cotton exports only after meeting the needs of the domestic textile mills.

This is one of the resolutions passed at the annual meeting of the association held here recently. The decision of the Government even before cotton arrivals started in 2010 to permit 55 lakh bales exports led to steep hike in cotton prices. The prices shot up from Rs. 30,000 a candy to Rs. 65,500 a candy and have now declined to about Rs. 35,000.

The Cotton Corporation of India should operate in such a way that farmers and textile mills benefitted on the price front.

Banks should provide seven per cent interest to textile mills for cotton purchase since the units purchased an agricultural commodity. Agricultural loans were extended at seven per cent interest. The margin money should be reduced to 10 per cent from 25 per cent. Since the mills were now incurring losses, the units were unable to repay the loans. The banks should provide two year moratorium to the mills. For units that were becoming sick, the banks should extend long-term machinery term loan at 10 per cent interest instead of 15.75 per cent. The hank yarn obligation of 40 per cent should be reduced to 15 per cent and should gradually phase out the obligation.