Blaming the government for driving up fiber prices, textiles and garment firms have urged for a ban on futures trading of cotton. Domestic cotton prices have more than doubled to breach Rs 100,000-mark per candy of 356 kg in the past one year. Consequently, cotton yarn prices, too, have jumped substantially.
In December 2021, to regulate rising prices, stock and commodity markets regulator Sebi suspended futures and options trading for one year in seven farm commodities: chana, mustard seed, crude palm oil, moong, paddy (Basmati), wheat and soyabean and its derivatives. However, it did not ban cotton trading completely. However, now exporters have requested the government to ban futures trading of cotton completely. Similarly, they have requested the government to formulate a long-term strategy to ensure adequate availability of cotton to consuming industries, informs Raja Shanmugham, President, Tirupur Exporters Association.
Cotton yarn prices surged 20 per cent to Rs 446 per kg in May, points out Narendra Goenka, Chairman, Apparel Export Promotion Council (AEPC) in a letter to Piyush Goyal, Textile Minister. This continuous price-rise may make India highly uncompetitive in the global textile markets, he adds. The AEPC has recommended quantitative restriction on export of raw cotton and cotton yarn and besides reducing declaring cotton as essential commodity to help government regulate its supply. Sanjay Jain, former Chairman, CITI opines, rising cotton prices are eroding India’s competitiveness vis-à-vis the world’s largest textiles and garment player.
