Free import policy puts Maharashtra's cotton owners in trouble
Centre’s free imports to subdue cotton prices leave Maharashtra gin owners in dire straitsThe decision of the Central Government to extend duty-free imports of cotton till December 31 has pushed the businesses of gin press owners in Maharashtra into uncertainty.With India expected to see all-time high imports of 42 lakh bales of cotton (1 bale has 170 kg of ginned cotton), traders said the government has to step in to prevent the collapse of mandi prices of ‘kapas’ or raw unginned cotton with seeds, once the season starts.Last month, the Central Government decided to remove the 11 per cent import duty on cotton to support the domestic garment sector.Farm leader Vijay Jawandhiya had called the move suicidal, as it would leave the cotton farmers in dire straits. “The government had promised not to let farmers be affected. We want the government to remember its words,” he said.At present, while Indian candy is being traded at Rs 55,000-56,000, imported candies are available at Rs 51,000-52,000. Since the Central Government had waived off the import duty, Indian candy prices have come down by Rs 1,000/quintal.Pradeep Jain, founder director of the Khandesh Cotton Gin Press Factory Owners Traders Welfare Association, said the bigger question before the entire value chain would be the price realisation of farmers. Jain said most of the Gin Press owners and traders would be facing losses due to the availability of cheap imports. “But unless the Central Government, through the Cotton Corporation of India (CCI), steps in early, farmers would face severe loss,” he said.For this season, the Minimum Support Price (MSP) of cotton is Rs 7,710 per quintal, which has to be taken into account while finalising the price of a candy, which is approximately 356 kg of cotton. This invariably makes the candy trade at a higher price than imports, as the concept of MSP is not there in other cotton-growing countries, mainly the USA.Indian ginners, involved in the mechanical separation of cotton fibres from seeds, said the bales and candy (340 kg of pressed de-seeded cotton) are sold at higher prices in the international markets because ‘kapas’ is purchased at the government-declared Minimum Support Price (MSP).Initially, the exemption was till September, and later extended till December. This move has been welcomed by the textile industry, which felt the availability of cheap raw material would help them tide over the first few months of the cotton marketing season that begins during September-October.Atul Ganatara, president of the Cotton Association of India (CAI), the body representing the cotton value chain, said India would see an all-time high import of 42 lakh bales thanks to this move.At Khandesh, the Muhurt trade of cotton fetched a price of Rs 7,600 per quintal, which is lower than the MSP. These traders said it was a warning sign, as once the arrivals start, it would dip further. The condition of the cotton crop in most parts of the country is said to be good without any major reports of losses or pest infestation. Indian farmers had taken cotton over 108.47 lakh hectares, over the 111.39 lakh hectares of last season. Most farmers are worried about price realisation given the easy availability of cotton from overseas.
