31ST JANUARY, 2011

GROUP MEMBERSy Abhishekh Chavan y Mehul Maniar y Istekhar Shaikh - 11 42 73 .

Fabric also can be made from recycled or recovered cotton that otherwise would be thrown away during the spinning. make yarn used in crochet and knitting. Cotton also is used to . seersucker. and cotton twill.Introduction y Gujrat is the largest cotton producer city in india. weaving. chambray. and most T-shirts are made from cotton. denim for blue jeans. underwear. These include terrycloth for highly absorbent bath towels and robes. or cutting process. y Cotton is used to make a number of textile products. y Bed sheets often are made from cotton. and corduroy.Socks. popularly used in the manufacture of blue work shirts (from which we get the term "blue-collar").

y y RISKS RISING FAST IN COTTONNIDHI NATH SRINIVAS MONDAY JANUARY 31. Clearly. commerce has sent spinning mills to the ball. There is an urgency to buy. At the bottom is greater panic in New York. Meanwhile. Traders in New York are willing to pay $1.964 per candy on the world market. if exporters are to make maximum money. the groans will be heard all the way to New York. Sitting on the world s cheapest cotton. By July. Unfazed by opposition from the textile ministry. Perhaps that s because it understands so little of the business. That s a 14-cent difference.9 million bales in January immediately benefit. 09:36 AM India s cotton market is in a race against time. There is no restriction on quantity. Prices crossed a record Rs 50. bales shipped in March will be more valuable than those shipped later. 2011. There is no stipulation to only use cotton imported henceforth. in March.54 for it in July.000 for a candy this week. But they wish to pay $1. Goodbye to almost Rs 5. Spinners were allowed last week to export yarn made from imported cotton. It won t even recover the making charges.970.5 million bales to export quota. no spinner has the wildest chance of finding Chinese buyers for Indian yarn made from expensive American or Egyptian cotton. Even commerce should have found that deal hard to swallow. As it usually takes a month after the decision for shipments to start.000. And there is an equal rush within government to increase the quantity that can be exported. That s why all eyes are on the meeting of the committee of secretaries next week. the moment is now or never. If the committee develops cold feet and postpones the decision to March. Exporters allowed to sell 1. Converted into rupees. the commerce secretary himself is pitching for addition of 1. There is an urgency to ship out cotton. Nor is a correlation necessary between the quality of cotton imported and yarn exported. it fetches Rs 54. . The commerce ministry is ever keen to play fairy godmother.68 for a pound of cotton in March. cotton is worth Rs 59. Or just a desire to be even handed. And the bonanza will become part of folklore if government fattens the goose further.

If the market corrects. But they remain equally exposed to inventory losing value and messing up credit lines. Their existing yarn export quota is extra. Cinderella never had it so good. Ditto their equity investors. And that s really the biggest danger today. That s an explosive situation. they are bankrupt. exporters and CCI. Record prices can turn a self-fulfilling prophecy. It s after all the exportable surplus. No more. They use bank finance to buy raw material.5 million to the original limit of 5. How far cotton rises is not important.y The upshot is that mills which routinely import up to 5 lakh bales extra long staple cotton annually for superfine cloth can now use it as an excuse to export yarn made from ordinary desi cotton. Government-owned Cotton Corporation of India alone plans to trade 3 million bales for profit. That evens out profit and loss and the business is hedged. Surely correction is inevitable. without a semblance of risk management. . Between exports and scurry to secure raw material. You can t take one without the other. it bets on prices falling in futures trading. traders. Textile companies are no better. Normally. Multinational trading companies are scalded. They never expected futures to rise by the maximum permissible limit for days in a row. They bought large quantities of Indian cotton. Exceptional rewards come hand in hand with exceptional risks. There ought to be plenty left. Or can t.5 mn) should have enough power to pull up the five times larger Indian market of 33 million bales. Most don t use futures for hedging. spinners. But for once the tail seems indeed to wag the dog. the cotton India doesn t need. Everyone is so bullish that no one is hedging risk. Their bankers ought to be extremely worried right now. when a company hopes physical market will rise. The consequent margin calls have wiped out profit in the Indian market. It has become in everyone s interest to keep cotton prices high farmers. Will it boomerang on our faces is the real question now. To offset that. All this still doesn t explain why 7 million bales (if you add that extra 1. they bet on prices dropping on New York s ICE exchange. Local traders and ginners are using personal cash. spinners and weavers too are caught in buying frenzy.

000 per candy (170 kgs make one candy) and the ban at this stage would hardly make any difference to domestic prices. convener of Television 2010 said. . y Cotton prices in the domestic market is already up by around 35% at Rs 30. though the textile industry has been demanding it for a long time to contain spiralling cotton prices in the domestic market. Nangalia.BAN ON COTTON EXPORT y The textile ministry has put a ban on exports of raw cotton through suspension of registration from April 19 for an indefinite period.

Reasons on ban y India's decision to ban cotton export until further notice will raise prices of cloth in Britain and other parts of the world. a crop wipe out caused by rains in India. seed and transport fuel. y India is the second biggest grower of cotton after the United States. besides higher costs of fertilisers. Cotton prices have been gone up sharply by a mixture of roaring demand from China. . industry sources believe. according to retailers and manufacturers in London .





Effects y NAGPUR: A ban imposed on cotton exports by the Central government has led to a steep fall of around Rs 500 per quintal in cotton prices. farmers may have to think of shifting to other cash crops in this sowing season. causing panic among cotton growers in Vidarbha. . one of the largest cotton-growing regions of the country. y If the ban is not removed. since open market prices are expected to fall further during the procurement season.

y There is an equal rush within government to increase the quantity that can be exported.EFFECTS OF BAN ON EXPORT. . y Use bank finance to buy raw materials. y So cotton prices are high. y Local traders and ginners are in danger.

y List of Completed Market Yards y List of Market Yards which could not completed and bills have not been submitted upto 31st March.2008 . 2010 y Proposals Pending for Development of Market Yards as on 31.01.

Development of integrated water and nutrient management practices for cotton and cotton based cropping system. disease and y y y y y y pest resistant varieties/hybrids with appropriate fibre parameters to meet the need of the textile industry. . Accelerating Integrated Pest Management activities. Providing adequate and timely information input to the farmers periodically. Development and validation of Integrated Pest Management Technology for different cotton growing areas of India to improve yield and reduce the cost of cultivation to ensure better net return to the cotton growers.Other Possible solution to meet Demand and Supply y Development of short duration. high yielding. Technology Transfer through demonstration and training. Supply of delinted certified seed by setting up of delinting units.

. up from 29.RecommendationsIndia should relaxed export controls subsequently as good monsoon rains have raised prospects of higher local output and stable prices. India is likely to produce 32.5 million bales of the fibre in 2010/11. India is the second-biggest producer of cotton so there will be huge demand of cotton for export.5 million bales in 2009/10.

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