The Southern India Mills' Association (SIMA) has welcomed the government order on sale of cotton stocks with the Cotton Corporation of India (CCI) to MSME spinning mills registered with the office of the Textile Commissioner. Thanking the Union Textiles minister for addressing the concerns of spinning sector that is already burdened with over capacity and reeling under rising prices of stock, the Secretary General of SIMA, Dr K Selvaraju expressed hope that the government would make the order permanent so as to limit the sale of CCI cotton stocks to spinning mills directly.

The industry body described the government order to this effect as proactive and said that the move would bring about stability in cotton prices during off season as well as satisfy the raw material requirement of small spinning mills.

Meanwhile, chairman of SIMA, M Senthilkumar advised spinning mills against resorting to panic buying. He said cotton prices would soften with the availability of 43 lakh bales of closing stock estimated by the Cotton Advisory Board (CAB) and imported cotton already contracted by some millers. Senthilkumar says, cotton imports in the next three months might exceed 15 lakh bales as large number of mills had already contracted for imports with African countries and Australia.

Giving the backdrop against rising prices, the release noted, that the spot price of benchmark cotton variety Sankar-6 which was ruling at Rs 33,000 per candy of 355 kg during first week of April 2016, had increased to Rs 34,700 per candy by the month end. It then further increased to Rs 36,800 by the end of May 2016 and to Rs 42,700 by the end of June. In July, prices had touched Rs 48,000 per candy, an increase of over 45% over the last three months. This translated into an increase of Rs 60 per kg of clean cotton cost used for combed count yarns.