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Cotton MSP, textile industry pursues proper delivery mechanism

The textile industry has demanded the government put in place a distribution mechanism for the industry, winding below the pressure due to various reasons, for getting the raw material at reasonable rates. While welcoming the 28 per cent hike in minimum support price (MSP) of cotton to safeguard farmers get at least 50 per cent profit of their actual cost of production, the Confederation of Indian Textile Industry (CITI) cited that at one level the move would increase farmers’ income, leading to an increase in domestic consumption that would eventually support the overall Indian economy.

However, there is a need to examine the event from different perspectives and understand that lakhs of farmers gain should not impact the $120 billion industry which employs more than 10 crore people directly and indirectly. MSP was increased by Rs 1,320/quintal in 2009-10 to 2017-18, and in 2018-19, it has been increased by Rs 1,130/quintal. The impact is huge and possibly unprecedented.

Sanjay K Jain, chairman, CITI stated textile and clothing being an integrated industry, the proposed hike in MSP based on 1.5 times the A2+FL costs would impact each segment along the supply chain raising the final price of the product. Jain pointed out that higher MSP would further compel huge cotton procurement by the state-run Cotton Corporation of India (CCI).

Previously the Centre raised cotton MSP (medium staple) by a record 39 per cent in 2008-09, driving up CCI’s procurement to an all-time-high of 8.9 million bales. Industry hopes that a clear CCI policy is spelt out, so that in case it needs to make a massive procurement, the industry gets regular offering from them throughout the season at international parity prices.

 
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