Southern India Millsâ€™ Association (SIMA) has signed a MoU (memorandum of understanding) with INSA (Indian National Ship Owners' Association) for transporting cotton through ships. Textile spinning mills in Tamil Nadu to start transport cotton from Gujarat to their units here by ship as the shipping companies have agreed to reduce cost, said T Rajkumar, chairman, SIMA.
TN produces only 5-6 lakh bales of cotton per year against its annual requirement of 130 lakh bales. To fill the gap in supply, TN mills procure over 120 lakh bales of cotton from other states, mostly from Gujarat and Maharashtra.
The industry officials said that the mills would start sending their consignments using ships in about a month's time. Shipping costs would initially work out to 590- 700 per bale (a bale is 170kg). Cotton is now being almost entirely transported through road from Gujarat, the largest producer of the crop in the country, to TN. Road transportation charges are about 850 per bale.
In fact, GTN Textiles has already shipped 10,000 bales from Gujarat to Kochi, industry sources said. TN mills procure nearly 60 lakh bales of cotton from Gujarat. Transportation of cotton by road had become unviable due to the steep increase in freight.
Textile mills are planning to use RO-RO (roll-on, roll-off) ships for transporting cotton as costs would be much lower. An entire lorry with cotton would be taken on the RO-RO ship, which after unloading in the port, would be driven to the mill. RO-RO ships also get certain exemptions and concessions.
SIMA secretary general K Selvaraju said that they hope to reduce shipping costs to 500 per bale from the next (cotton) season (starting October). Their aim is to bring down transportation cost to 400 per bale. The union government is also working on an initiative to promote coastal shipping where it plans to offer incentives, which will reduce transportation costs by 40 per bale if incentives are offered.
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