The textile industry in Punjab and other northern states is facing a difficult year as most of the new cotton crop is being exported to neighbouring Pakistan, where devastating floods had destroyed almost a fifth of its standing cotton crop.
Traders and millers said this has given an opportunity to exporters in Punjab, Haryana and Rajasthan, three major cotton growing states in northern India bordering Pakistan.
Pakistan is one of the main importers of cotton from India, which is the second largest producer of the crop worldwide after China. Naturally a spurt in demand from Pakistan has meant prices soaring in this side of the border as well.
The price of cotton increased from Rs. 23,000 per candy (356 kg) in April 2010 to Rs 41,500 per candy as on date. The new cotton crop is selling at a 50-60%higher than the minimum support price of Rs 2,800 per quintal.
In fact cotton sold across various mandis of northern states of Punjab, Haryana and Rajasthan averages between Rs 3,500 and Rs 4,500 per quintal.
Rakesh Rathi, President of Northern Indian Cotton Association (covering the state of Punjab, Haryana and Rajasthan) told FE that farmers settled along the Indira Gandhi Nahar Project command areas in Punjab and Rajasthan had increased area under cotton this year after Centre sanctioned a Fund of Rs 1, 410 crore for the repair of the main canal as well as its lined distribution system to prevent water leakage.
Corporate General Manager of Vardhman Group, IG Duria commented that India should have allowed export only of surplus cotton if any or else it would be counterproductive and hit local industry hard.
Ashish Bagrodia, president, Northern India Textile Mills Association and managing director of Chandigarh-based Winsome Group said: The registration of export contracts with the textile commissioner was opened on October 1, for shipment from November 1 onwards. However, the entire quantity of 55 lakh bales was applied for registration within 10 days and therefore registration had to be discontinued on October 10.
Now these shipments have to be completed by December 15 as per the stipulation of registration and that would mean that 55 lakh bales will have to be procured by cotton exporters by end November 2010. This means that there will be little left for the domestic industry, he observed.
