Company Details
What movements do you notice in the cotton market? How do constant policy changes in cotton affect your kind of businesses? What expectations do you have from the govt for better & smooth operations?
Cotton
is the backbone of the country when it comes to textile industry as most of the
textile fibre consumption continues to remain in Cotton including ours. Cotton
market in India is slowly but steadily coming in sync with the global market.
All the factors which are affecting global cotton demand and supply are having
a significant effect on Indian cotton prices as well. But, it is unfortunate
that since last few years the global market is being driven more by
speculators than by actual users resulting into Cotton trade being caught in
the quagmire of market sentiments than by actions.
Another
important factor affecting Cotton trade today is that of China. China has
acquired such an important place in the overall dynamics of Cotton trade that
its policies are having enormous impact on the prices. China being highest in
terms of Cotton Production & Consumption but with its whimsical policies,
is having a enormous impact on the way various governments of other countries
frame their policies. This has resulted into abnormal volatility causing
extensive damage to the whole of cotton supply chain.
Volatility,
per se, in any business is very harmful for the performance of any sector. With
presence of high fluctuations, people in the trade start taking long or short
positions trying to maximize their gains. This scenario causes long period of
cyclic nature into the business which is never good for the industry as in periods
of high demand, no manufacturer can take full advantage owing to restriction in
production capacities and finances involved in the business. In such periods
they also tend to sour their relationship with their long term customers in
search of greener pastures. On the other side, during lull periods the
manufacturer is forced to slow down production, cut labour force and ultimately
take a hit on margins and then sell. Thus cyclic/periodic spurts in demand and
supply are not helping the industry to stabilize and grow.
Further adding to the woes of this cyclic nature of business is the constant tinkering with the regulations of cotton trade by various governments. Unfortunately mostly these actions/policy changes are reactions to the actions of the counterpart government creating a chain of events which ultimately disturb the trade irreparably. Long and sustained efforts put in for number of years by organization like ours goes waste by such hasty decisions causing significant damage resulting into complete anarchy and ballooning losses.
Keeping
in view the above, my expectation with the government is to make long term
rational decisions based on the current need of the total supply chain. I
appreciate that in our agrarian economy where millions of people are engaging
themselves in cotton farming and have their whole livelihood depending on
Cotton crop, Government of India has to maintain a balancing act between the
interests of both the parties i.e. Growers and Users who continue to provide
the second highest employment in the country. Textile Ministry has to
understand that the strength of the country lies in spinning with its
state-of-the-art machinery setup available in the country and also has to make
sure that the valuable raw material does not get exported out of the country
without any value addition. On the Cotton production front, focus should be
directed in ensuring that quality of cotton grown in the country is as per the
need of the downstream users with productivity too matching the global standards.
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Published on: 14/08/2012
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.