Cotton prices around the world have come under pressure. In India, prices dropped to Rs 44,000 per candy compared to Rs 47,000 just 10 days ago. Globally, cotton prices are currently ruling at Rs 42,000 per candy.

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Dinesh Nolkha, managing director of Nitin Spinners and Atul Ganatra, president of Cotton Association of India, spoke to CNBC-TV18 about the correction in cotton prices.

“Cotton prices in India have not come down much compared to international markets. Indian cotton has reduced by 5 percent,” said Ganatra on Tuesday.

“Cotton crop is around 15 percent less this year compared to last year mainly because cotton yields have drastically dropped this year. Yield reduced because of three main reasons – one is, there were no rains last year in the month of August, September. Two is most of the farmers now want to take two-three crops, so they don’t want to keep cotton plants after December. The third is, it is too early to speak about next year’s crop because we are lacking behind in sowing so far. States like Gujarat, Maharashtra, Telangana, Karnataka are facing a huge deficit of the rains. It is around 26-38 percent deficit of the rains. We have to wait and watch for the second half of July,” he added.

On the global cotton prices, Nolkha said, “International cotton for us has gone down by about 25 percent and Indian cotton has just gone down by 5 percent. We are severely impacted by the US-China tariff war. The sentiment of textile industry all over the world has gone down substantially because China is the major importer and exporter of textile products."

“There is a news going around the circle that many of the textile mills in north India as well as in south India are planning to cut their production due to the lack of demand as well as demand-supply imbalances which is severely going to impact margins,” Nolkha said.

“This year we had very fewer crops. There is a shortage of cotton in India. The prime exporter of cotton at this time is the US and a lot of logistics cost which is about 10 percent of the total cost has to be incurred, which makes it slightly expensive but still there is a lot of import going on. However, that is going to erode the competitiveness of the industry. Everybody cannot import, a lot of spinning mills which are small ones does not have the facilities to import the cotton and that is severely going to affect the margins of the textile industry,” he said.

Speaking about the shortage of raw material, Ganatra said, “The problem the textile industry is facing is a shortage of raw material that is because our crop is reduced by 15 percent and the main reason for reducing crop was our yields have reduced.”

First Published:Jul 16, 2019 11:32 AM IST