With market analysts predicting cotton prices unlikely to fall until next season that starts in October, textile mills in Coimbatore are desperately taking measures to reduce production and raise prices of hosiery yarn. Though the Tamil Nadu government does not have a role to play in cotton pricing, officials of textile mills say reducing taxes as per their earlier demand will go a long way. Domestic cotton prices, especially the preferred Shankar-6 variety, have risen from Rs. 34,000 per candy (355 kgs of cotton) in April to Rs. 49,000 per candy by July-end.
As per India Ratings and Research, prices of cotton are unlikely to come down till October when the new season begins. As a result, textile mills in the state which account for 46 per cent of the spinning capacity in the country, preferred to bring down their production by 15 to 20 per cent, to curtail losses. The textile industry accepts that the state government cannot play a role in stabilising or bringing down cotton prices but feel they can take long- and short-term measures to help the industry tide over current crisis and prevent it in the future.
In his observation, Southern India Mills' Association (SIMA) chairman M Senthilkumar said that though the GST bill has been passed, at least till it is implemented, the state government can reduce its VAT (value added tax) on cotton cone yarn from 5 to 2 per cent to bring it on a par with the central sales tax.
