Textile Mills Expect Better Q4 On Ministry’s Move

MUMBAI (Commoditiescontrol) – Textile industry is banking on the textile ministry's move to allow mills to pay only 10 per cent of procurement money that will ease production cost in the last quarter of 2016-17 fiscal year. Further, the industry also hopes of good order inflow for summer season of 2017 that will also boost the fourth quarter results. Textile mills hope that Q4 will ride over the Q3 impact of demonetization.

Traditionally, large traders and multinational cotton traders would take advantage of hedging facility and cheaper funds, smaller mills are unable to build adequate inventory and pay higher price for the cotton during the off season. In India, over 75 per cent of cotton arrives in market during December to March and around Rs 60,000 crore is required to procure the same during this period. Since ginning and spinning mills do not have such funds, the farmers invariably get lower price.

To ward off such a situation, the cotton textile industry has been demanding the government to ensure cotton fibre security and stability in prices so that both the farmers and the industry are benefited and remain competitive in the global market.

Now, with the textile minister directing Cotton Corporation of India, that normally procures cotton only when the prices crash below the MSP level, to procure cotton on a commercial basis and supply to the mills, which is welcomed by the textile industry.

According to the new terms and conditions of fully pressed bales, CCI facilitates registered MSME textile units to procure cotton by paying only 10 per cent deposit money as against 20 per cent which is applicable only for the sale quantity of 30,000 bales and above. The deposit money up to 29,999 bales is only 15 per cent. Further, the free period has been made uniform and fixed at 45 days from the earlier 30 to 75 days would help the actual consumer and the MSME units.

Textile industry has also requested CCI to opt for coastal movement of bales between Gujarat and Tamil Nadu that would yield considerable saving of 10-25 per cent in freight costs for mills.

(By Commoditiescontrol Bureau; +91-22-40015522)