Centre sets up cotton council to examine price rise issue; export curbs on the cards

The first meeting of the proposed council has been scheduled for May 28.

"The council will discuss, deliberate and prepare a robust action plan for bringing out a tangible improvement in this field," a government press release said.

The price of cotton has more than doubled since October 2021.

Cotton prices gained nearly 40 percent in 2022 and were reported to at an 11-year high on May 13. The exponential surge has been hurting cotton yarn spinners and cotton-based textile and garments manufacturers.

The price of cotton has more than doubled since October 2021.

The minister and the stakeholders termed cotton productivity "the biggest challenge in the country". Goyal even asked stakeholders to resolve the cotton and yarn price issue "in the spirit of collaboration rather than competition and super profiteering, without pushing the government to intervene as it may have a long-term impact on the cotton value chain".

Piyush Goyal said, "The government is committed to protect the interests of cotton farmers, spinners and weavers."

Addressing the stakeholders at the meeting, Goyal said the exports of cotton should not be at the cost of the domestic industry, and appealed to traders to divert only excess cotton and yarn for exports.

"Piyush Goyal appealed to the spinning and trading community to ensure hassle-free supply of cotton and yarn first to the domestic industry...He appeals to divert only surplus cotton and yard for exports," the press release said.

"The council will prepare a robust action plan to tangibly improve the cotton sector... Need to hold hands of cotton farmers, extending support for backward and forward integration," Goyal stated.

Hit by the drastic surge in prices of cotton, spinning mills have become partially operational, while a few fabric manufacturers have decided to hit pause on production at least for a few days.

The government tried supporting the sector by removing the 11 percent import duty on cotton in April.

This move was aimed at encouraging purchases from markets outside of India to address domestic shortages. However, it may have resulted in a surge in international prices.

Meanwhile, the crisis has triggered fear that India may ban cotton export to stable the price rise in the country itself. It is likely that cotton exports may be banned till September if prices don't cool down. At the meet, the ban on exports was discussed as the last option on the table.