COIMBATORE: The South India Cotton Association, to be known as Indian Cotton Federation (ICF) in future, is working on formulating a standard contract for cotton as most of the disputes were common, the newly office bearers of the Association said today.
The contract would cover both domestic and international trade in Indian cotton and the standard contract would be finalised after iscussing with all major stakeholders and the regional associations, J Thulasidharan and K N Vishwanathan, newly elected president and vice-president, respectively of SICA told reporters here.
While in a majority of default cases negotiations were being held, any arbitration would be guided by theIndian Council of Arbitration and the relevant acts, he said.
The huge volatility in cotton prices in the early part of the year led to an unprecedented increase in defaults by both buyers and sellers, he said adding that it was a year of defaults, which was unprecedented as the volatility in prices resulted in the huge defaults.
Cotton prices, which soared to a record high of Rs 63,000 a candy in February to April crashed to Rs 30,000 in just a few weeks in tandem with global commodity prices pushing the trade and industry into a tailspin.
When the prices nosedived suddenly, many buyers did not take contracted orders, A Ramani, secretary, said. The defaults on the private trade side was estimated at around five to six lakh bales and “these unavoidable situations has created the necessity to work for a common contract for Indian cotton,” C Soundarajan, the outgoing president of SICA, said, at the end of 32nd Annual General meeting of the association.