Chinese demand is an important factor for determining market prices of raw cotton and lint. Due to a fall in Chinese demand, cotton prices have touched the minimum support price of Rs4050 a quintal in India, bringing tough times for Vidarbha farmers.
According to the trade representatives attending the Textile Association-India (TAI) conference in Nagpur, Vidarbha cotton growers likely to face another year of recession as China, the major consumer of Indian cotton, plans to keep imports of the commodity under control.
Representatives of Hurai Information, a textile consultancy firm from Hangzhou in China, said that their government is not keen to release cotton import quotas beyond 89,4000 metric tons committed under WTO agreement. This will keep the imports from India down.
The Chinese government wants to promote the domestic cotton. Moreover, the focus is on chemical textile industry rather than cotton. As a result, cotton textile business has seen a plunge in China too.
Back in India, stakeholders in textile business are of the view that the industry is feeling the heat of falling crude prices. Though it may have been beneficial for the domestic economy, it has led to an adverse impact on the textile industry.
Arvind Sinha, president of TAI said that the fall in crude prices has hindered the economy in countries like Russia and Venezuela, which make major export market for Indian apparel industry. The middle-east countries are also in a cautious mode apprehending a slump, with the demand already low in the US. There has been a close to 30% slide in the price of fibre and cotton prices are at an all-time low. The next quarter release of garments may see a cheaper range being launched. As against $50 shirts, the price range may be set around $20.
At the same time there has been no cut in capacity utilization as reducing or shutting down operations can mean more losses for the units. However, the recession can be taken as an opportunity by coming up with innovations and value addition in products.
Earlier, at the inaugural session of the TAI conference, Gadkari said that the government is planning to develop inland waterways which can be used for transport of cotton. A port will be developed on the banks of Godavari river in Nanded, which can eventually transport cotton in smaller vessels to the textile industry hubs in South India, this will help to reduce the cost by almost 75 percent.
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