Bring cotton under Essential Commodities Act: TN bodies to Indian govt

05 May '22

3 min read

Pic: Shutterstock

Tamil Nadu based industry organisations have urged the Indian government to bring cotton under the purview of the Essential Commodities Act. The demand has been raised in view of the steep rise in the prices of cotton and cotton yarn in recent days. The organisations are also involving local MPs to effectively put forward their demands before the government.

Spinning mills in Tamil Nadu this week increased the price of cotton yarn by ₹40 per kg on account of costlier cotton and lower availability of the natural fibre. Industry bodies said they are shocked by the steep hike of nearly 10 per cent in prices, as they were expecting respite in yarn prices after the Indian government removed import duty on cotton in mid-April.

“The government should bring cotton under the purview of the Essential Commodities Act,” Tiruppur Exporters’ Association (TEA) president Raja M Shanmugam told Fibre2Fashion. If cotton is brought under the Essential Commodities Act, market sentiments will be depressed, and cotton prices will fall immediately. If the industry’s demand is accepted, the government can impose stock limits on cotton, and traders and multinational companies will not be able to stock cotton more than the stipulated limit. They will also have to clear their stocks within the stipulated time.

Industry sources said that traders and MNCs have stock of around 40 lakh bales (170 kg each) of cotton. This stock can be immediately released by bringing cotton under the Essential Commodities Act. However, it is debatable whether cotton can be brought under the Act because it pertains to essential commodities meant for daily life.

TEA has also demanded that the cotton export should be banned immediately. Such a step would not affect farmers, as cotton stocks are currently held by traders and multinational companies.

TEA is also in favour of imposing restrictions on cotton yarn to ensure its supply in the domestic market. It has further suggested that cotton should be removed from the list of permitted commodities for futures trading, because such trading also pushes up cotton prices, endangering the entire value chain.

To further press their demands, apparel manufacturers and exporters of Tiruppur and Tamil Nadu are planning to go on a 6-day strike from May 16-21.

Meanwhile, the southern India Mills Association (SIMA) has appealed the spinning mills to withdraw the steep increase of ₹40 per kg, and instead implement price increase gradually.

The Federation of Garment Unit Owners Association has also opposed the recent hike in cotton yarn price.

ALCHEMPro News Desk (KUL)

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