Cotton is not available to India's textile industry at competitive rates. It has to be brought from distant places, incurring additional transportation and other costs. Mills want cotton available to them at a competitive rate and as soon as possible. They want the Cotton Corporation of India (CCI) to release its stocks and make cotton available to the industry. They say if this is not done immediately, it may distort the market and leads to artificial increase in prices thereby making the user segment uncompetitive.

The role of the CCI is primarily to ensure minimum support price for the farmers so that they get a remunerative price for their products. Mills are largely dependent on CCI for their cotton supply. The total requirement of mills is close to 85,000 to 90,000 bales per day whereas CCI has been offering only 40,000 bales per day.

Indian cotton has been cheaper than international cotton. But the situation has changed significantly now and prices are substantially above international prices mainly because of low cotton arrivals in the market. Mills say CCI’s huge stocks are pushing up cotton prices all over the country and that taking advantage of this situation, private traders are hoarding cotton.

According to FICCI the arrival of cotton in the Indian market has dropped considerably in the last few days to 20,000 bales, which also has largely remained unsold because of excessively high prices.

Till date CCI has sold 10.8 lakh bales of cotton and hence carrying stocks of 75 lakh bales, as CCI has bought 85.8 lakh bales of cotton in the current season.

Cotton acreage in India, the top grower in the world, is likely to drop by the most in over a decade this year, as plunging prices and fears of a drought prompt farmers to switch to cultivating pulses in the hope for better returns. Since other crops are giving better returns, there may be a drop of around seven per cent in cotton acreage in India. That will be the steepest fall since 2002-03.

Lower output at the world’s second biggest cotton exporter, after the United States, should help give legs to a recovery in global benchmark prices that have risen 13 per cent from a five-year low of 57.05 cents per pound plumbed in January.

Amid concerns among the industry that not enough cotton has been exported, the Cotton Corporation of India has finally come out with its global tender for export of cotton to Bangladesh.

The earlier advertisement by CCI inviting buyers to register themselves for export to Bangladesh had garnered a good response and some ten exporters had registered themselves with CCI in addition to some of the domestic buyers who export as well. Bangladesh usually purchases around 55 to 60 lakh bales of cotton from India.

CCI chose Bangladesh since the logistics are better and are easier to manage either by the sea or roadway.