The Indian textile industry, which relies heavily on cotton, has faced numerous challenges due to the removal of cotton from the Essential Commodities Act since 2007. Price volatility in cotton futures trading on the MCX platform has had a severe impact on the industry in recent years. In response to these challenges, Piyush Goyal, the Union Minister of Textiles, earlier had established a Textile Advisory Group to address the issues facing the industry.

The Product Advisory Committee made several recommendations to mitigate the challenges, including the reconstitution of the MCX Cotton Product Advisory Committee to benefit all stakeholders and curb speculation. Based on these recommendations and the approval of SEBI, MCX launched a new contract on February 13, 2023. A workshop was conducted on February 27, 2023, at The Residency Hotel, Coimbatore, to create awareness among stakeholders. The workshop included presentations on cotton hedging and cotton contract specifications.

The revised cotton contract specifications have taken into account the concerns of stakeholders across the textile value chain, including farmers, ginners, traders, spinning mills, downstream sectors, and exporters who often face price volatility. The new contract specifications are expected to bring more volume of cotton into trade, increase liquidity, and benefit all stakeholders.

Chairman of CITI and Chairman of Product Advisory Committee of MCX, T.Rajkumar and SIMA Chairman, Ravi Sam, advised all stakeholders to actively participate in the MCX cotton futures trading to reduce the risk of cotton price volatility. They hoped that the new contract specifications would increase physical transaction and lead to more spinning mills participating in the market, and also hoped that two more pending specifications in the MCX cotton futures would be reduced in the coming months to control speculation in the price.