Lok Sabha Question No. 1571 (UNSTARRED), answered on 2018-07-26
Subject: Rates of Raw Material
Ministry: TEXTILES
Asked by: VINAYAK BHAURAO RAUT, PRITAM GOPINATH MUNDE, DHARMENDRA YADAV, ANANDRAO  ADSUL, SHRIKANT EKNATH SHINDE, KUNWAR PUSHPENDRA SINGH CHANDEL, Shrirang Appa Barne, SHIVAJI ADHALRAO PATIL

## RATES OF RAW MATERIAL

1571.   SHRI VINAYAK BHAURAO RAUT:

DR. PRITAM GOPINATH MUNDE:

SHRI DHARMENDRA YADAV:

SHRI ANANDRAO ADSUL:

DR. SHRIKANT EKNATH SHINDE:

SHRI KUNWAR PUSHPENDRA SINGH CHANDEL:

SHRI SHRIRANG APPA BARNE:

SHRI ADHALRAO PATIL SHIVAJIRAO:

Will the Minister of Textiles वस्त्र मंरी be pleased to state:

- (a) whether the textile industry has requested the Union Government to put in place a delivery mechanism for the industry, reeling under pressure due to various reasons, for getting the raw material at reasonable rates and if so, the response of the Union Government thereto;
- (b) whether 28% hike in Minimum Support Price (MSP) of cotton to ensure farmers get at least 50% profit  of  their  actual  cost  of  production  would  impact  each  segment  along  with  the supply  chain  raising  the  final  price  of  the  product  and  if  so,  the  response  of  the  Union Government thereto;
- (c) whether higher MSP would further compel huge cotton procurement by Cotton Corporation of India (CCI);
- (d) if so, whether there is a need to spell out clear CCI policy so that in case it needs to make a massive procurement, the industry gets regular offering from them throughout the season at international parity price; and
- (e) if so, the concrete steps taken by the Union Government to formulate policy in this regard?

## उत्तर

## ANSWER वस्त्र राज्य मंरी (श्री अजय टम्टा)

## MINISTER OF STATE FOR TEXTILES (SHRI AJAY TAMTA)

(a): Yes, Madam.  There have been representations from the Industry in this regard.  At present, the  domestic  prices  are  ruling  below  the  International  prices  of  raw  cotton  making  raw  material available  at  competitive  rates.    The  details  are  at  Annexure.    Further,  Government  of  India  is implementing  the  Yarn  Bank  Scheme  under  PowerTex  India  to  provide  interest  free  corpus  to groups/Special Purpose Vehicles (SPVs) to enable supply of yarn at reasonable prices to the small powerloom units.  The Government is also implementing the Yarn Supply Scheme in the Handloom sector, in order to enable handloom sector/weavers to compete with Mill Sector.  10% price subsidy is provided under Yarn Supply Scheme on cotton, domestic silk, woolen and linen hand yarn with quantity restrictions.

(b) to (e): In  order  to  ensure  better  productivity  and  production  and  to  protect  the  interest  of farmers, Government of India has increased the Minimum Support Price (MSP) for 2018-19 by 28% and 26% for Medium Staple Cotton and Long Staple Cotton respectively.  As the prices of Indian Cotton  are  ruling  below  International  prices,  there  is  no  likelihood  of  an  adverse  impact  on  the textile  supply  chain.  Support  price  comes  into  operation  only  when  market  price  falls  below  the Minimum Support Price (MSP) declared by the Government. As the Nodal Agency of Government of  India  for  procurement  of  seed  cotton  (kapas),  the  Cotton  Corporation  of  India  (CCI)  has  laid down standard procedure for handling its cotton procurement operations. CCI undertakes Minimum Support Price (MSP) operations on behalf of Government of India when the prices of Fair Average Quality  (FAQ)  grade  seed  cotton  (kapas)  fall  below  the  MSP  level.      Every  year,  CCI  opens adequate procurement centres in all the cotton growing States to cover maximum cotton arrivals. For the current cotton season, CCI has opened 348 procurement centres and is active in the market from day one of the cotton season to ensure remunerative prices to the cotton farmers. CCI also regularly sells its stock through e-auction to the domestic textile Industry including Micro, Small & Medium Enterprises (MSME) units. This not only provides quality cotton to the Indian Textile Industry at most competitive rates but also stabilizes the market.

## Annexure

| Month                        | Domestic Prices (S-6 Variety) in   | International Prices (Cotlook A )   | International Prices (Cotlook A )   | Variation between domestic and   |
|------------------------------|------------------------------------|-------------------------------------|-------------------------------------|----------------------------------|
|                              | Rs./ Candy                         | in USC/lb                           | Conv. in Rs/candy                   | International prices             |
| October, 2017                | 38468                              | 78.68                               | 40126                               | -4.13%                           |
| November, 2017               | 37462                              | 80.39                               | 40921                               | -8.45%                           |
| December, 2017               | 39296                              | 85.58                               | 43113                               | -8.85%                           |
| January, 2018                | 41084                              | 90.91                               | 45350                               | -9.41%                           |
| February, 2018               | 40061                              | 88.27                               | 44568                               | -10.11%                          |
| March, 2018                  | 40846                              | 92.07                               | 46947                               | -13.00%                          |
| April, 2018                  | 41172                              | 92.13                               | 47414                               | -13.16%                          |
| May, 2018                    | 42246                              | 94.45                               | 50009                               | -15.52%                          |
| June, 2018                   | 46265                              | 97.71                               | 51943                               | -10.93%                          |
| July, 2018 (Upto 14.07.2018) | 47192                              | 94.40                               | 50845                               | -7.18%                           |

Source: Domestic Prices: Cotton Association of India (CAI); International Prices: Cotlook

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