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Cotton traders oppose Textile Ministry’s proposal to set up cotton reserve

26 Apr 2012 Evaluate

Cotton traders have opposed the Textile Ministry’s proposal to set up a cotton reserve stating that such a scheme will distort the market and unsettle other sectors of the cotton value chain. The Textile Ministry on the other hand is of the opinion that such a reserve will ensure the supply of the fibre to Indian mills.

The President of the Cotton Association of India, Dhiren N Sheth has stated that India should not try and emulate China’s model since China is a cotton deficient country. India on the other hand is a cotton surplus country where the fibre is available at the doorstep of the mills.

Further, the total investment for procuring 25 lakh bales will amount to Rs 5,000 crore approximately, excluding the carrying cost and annual warehouse cost. Also the Cotton Corporation of India (CCI) will have to bear the loss that may arise due to fluctuation in prices.

By adding further Sheth said, if Indian mills feel that they are unable to stock cotton due to lack of funds then this issue should be addressed by making credit available through the banking channels and not by creating a reserve which will distort the market and may prove to be unprofitable.

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