"We are importing as there is a shortage of cotton (in the local market)," said S Dinakaran, chairman, Southern India Mills' Association ( SIMA). Mills are importing cotton at 76 cents to 83 cents a pound, which is lower than domestic prices, said Ashok Damji Daga, director, Indian Cotton Federation.
Mills have said the shortage is due to the huge increase in cotton exports in the current season (October-September). Exports have crossed 120 lakh bales this season compared to the estimate of 85 lakh bales made by the Cotton Advisory Board, a body that has representatives from the government, trade and industry.
Textile mills are importing cotton that is mainly used for spinning yarn of coarser counts, officials said. "The quality of Indian cotton is much better." Overseas sellers are offering lines of credit for 3-6 months. Cotton consumption by the mill sector is estimated to be around 20 lakh bales a month during the current season. The overall consumption is expected to be about 260-265 lakh bales.
Though cotton imports is being seen as a short-term phenomenon, officials caution that buying would go up if the monsoon doesn't bring enough rains in key growing states such as Gujarat. The Saurashtra region in Gujarat, a major cotton growing zone, has received poor rainfall so far, industry officials said.
"If there is a delay, we would at least get a late crop. But if the rainfall is not adequate we may face problems," officials noted. "If the monsoon doesn't pick up, imports could go up," SIMA's Dinakaran said.
Prices of the popular Shankar-6 variety have increased by Rs 6,000-8,000 for a candy (about 355 kgs) in the last one and half months and are now hovering around Rs 39,000 for a candy, a senior official said.
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