As cheap imports and sluggish exports loom large over the domestic cotton market, Pasha Patel, head of Maharashtra government’s committee for agriculture cost and pricing, said an import duty on cotton could be explored to keep domestic prices steady.
Patel, speaking to The Indian Express, said adequate steps would be taken to ensure cotton prices remain steady in the new season, set to start post-October.
Domestic prices of kapas (seed cotton ) have been well above the government declared Minimum Support Price (MSP) of Rs 5,500 per quintal through out the 2018-19 season. However, July prices have reported a dip, which trade sources attribute to sluggish exports for both yarn and lint cotton.
In Maharashtra’s wholesale markets, average July price of cotton was Rs 5,850 per quintal, compared with Rs 6,242.92 per quintal in June. The same trend has been observed in most of the major cotton producing states in the country.
Traders claim that sluggish exports have dampened cotton sentiments in the markets. India’s 2018-19 export is expected to be around 46 lakh bales, compared with the 69 lakh bales it exported in the 2017-18 season.
On the other hand, imports have doubled, with the country recording 31 lakh bales of import as against the 15 lakh bales it imported in 2017-18 (one bale contains 170 kgs of cotton).
The downturn in export is mainly due to availability of cheaper cotton in the international market.
Patel said they are keeping a very close watch on the cotton scenario. “We are exploring options to boost sentiments, which would keep cotton prices above MSP,” he said. One of the measures, Patel said, was to stop the dumping of cheap import into the domestic market and that would be done by imposing higher import duty on raw cotton.
Cotton sowing has been going on at a steady pace, with India reporting a 5 per cent year-on-year increase in sowing. As of August 2, India has reported 115.5 lakh hectares of cotton sowing, which last year was 109.79 lakh hectares. India on an average reports 120.93 lakh hectares of cotton sowing during kharif.