Cotton procurement by textile mills to remain low till GST rolls out

Textile mills have reduced cotton procurement to maintain minimum inventory. The purchases are expected to remain low till things become clear after the GST is rolled out. Traders estimate that cotton purchases have come down by more than 50 percent in recent times.

Nirav Patel of a city-based cotton export house said that cotton buying by mills has reduced noticeably as mills are preferring to keep minimum stock.

Patel said that purchases from even exporters had declined as there is still confusion over whether exporters will get duty draw back on cotton purchased before June 30.

According to estimates, on an average, 4.5 lakh bales are bought by mills every month. One bale weighs 170 kg.

But mills are buying only as much as they require, said Arun Dalal, a cotton trader from the city. Low procurement by mills has also brought down cotton prices in local markets.

The prices of top quality Shaker-6 variety of cotton dipped to Rs 43,000 from Rs 44,000-44,500 per candy a few days back.

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