“Exporting large quantities of cotton at present would leave the industry at the mercy of traders for obtaining cotton from global markets at high prices,” Confederation of Indian Textile Industry (CITI) Chairman S V Arumugam said.
The demand for textile items in the domestic market is now recovering and this would lead to more consumption of cotton in the coming months, CITI said.
Yesterday, the government had decided to allow further exports of the natural fibre in 2011-12 marketing year as production estimates have been revised upwards by the Cotton Advisory Board (CAB) and the Agriculture Ministry.
Cotton season runs from October to September. Last month, the government had lifted the ban on the exports but decided not to issue fresh registration of certificates (RCs). It only allowed shipments for which RCs were issued before the ban was imposed on March 5.
In the beginning of the season, the CAB had estimated exports surplus of 84 lakh bales for the current year. But the country has exported 113 lakh bales so far in the current cotton season.
The textiles industry has been clamouring for relief from the government on the plea that rising raw-material prices and high interest rates have hit silk, spinning, handloom and powerloom units hard.
CITI said due to high cotton prices, majority of textiles mills in the country have already registered huge losses and they are finding it difficult to repay loans.
Last year, the cotton price touched a peak of about Rs 65,000 a candy (356 kgs).
Therefore, CITI said, it has requested the government and the Reserve Bank to restructure loans to help the cash-starved textiles units to tide over the crisis.
“The mills are not in a position to buy their requirements on a long-term basis due to cash-crunch,” it said.
Earlier this month, the CAB had revised production estimates upwards to 347 lakh bales from 345 lakh bales for the current season. It had also revised domestic consumption estimates downwards to about 250 lakh bales from 260 lakh bales earlier.
The Agriculture Ministry too had revised upwards cotton output to 352 lakh bales from 340.8 lakh bales.