Cotton Prices Drop Following Government Decision; 3% Decline Recorded
The impact of the Government of India's decision to suspend the 11% import duty on cotton until October has become immediately visible in the market. Following this announcement, a decline of approximately 3% has been recorded in the prices of both cotton and yarn. Industry experts believe that prices could witness a further reduction of 1–2% in the coming days.
Over the past three months, cotton prices had surged by nearly 27%. The price of 29mm cotton rose from ₹54,200 per candy in February to reach ₹69,200 per candy by mid-May. However, due to a softening in the international market, prices had already eased somewhat to hover around ₹65,000 per candy. On Monday, the Cotton Corporation of India (CCI) reduced the price of cotton by ₹700 per candy to ₹64,300, while yarn prices were cut by ₹10 per kilogram.
K. Selvaraju, Secretary General of the Southern India Mills Association (SIMA), stated that cotton prices are now softening, and spinning mills have been advised to lower yarn prices. The industry believes that the removal of the import duty will boost market availability and curb hoarding.
The textile industry had long been demanding the removal of this duty. Industry bodies argue that Indian exporters were losing ground in competition against countries like Bangladesh and Vietnam, where no duties are levied on imported cotton. The rising cost of raw materials has also impacted the competitiveness of Indian yarn and textile exports.
However, this decision has raised concerns among farmers. This step has been taken at a time when the government has announced a ₹5,659 crore 'Cotton Productivity Mission' aimed at boosting domestic production. Nevertheless, industry representatives maintain that the suspension of the import duty is for a limited period, and the 7% hike in the Minimum Support Price (MSP) will provide farmers with protection against potential price pressures.
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