New Delhi: Increase in minimum support prices of cotton by up to Rs970 per quintal would hit textile industry of the country which is already reeling under high interest rates and rising input cost, Confederation of Indian Textile Industry said.
The move will not only push the textile industry further down, but will also be counter productive even for farmers, CITI said in a release today.
Last week, the government decided to raise the support price of medium staple cotton by Rs700 to Rs2,500, while the same for long staple has been increased by Rs970 to Rs3,000 for the October-September cotton year.
CITI Chairman P D Patodia said rise in prices of raw materials, interest rates as well as input costs during the current year have already drained out the cost competitiveness of the country’s textile value chain and the huge increases announced in the MSPs for cotton would aggravate the situation beyond redemption.
During the last financial year and the first quarter of this year, most textile companies have made losses and many others have made substantially lower profits compared to the earlier years. These MSPs have eroded whatever hope the industry had of reviving in the near future, he said.
There is going to be chaos both in the industry and farming sectors, unless government is able to take immediate remedial action to sustain cotton consumption by reducing the MSPs or by assisting the industry to absorb the extra cost, he added.