India proposes Yarn Index System to protect industry from volatility

15 Jul '22

2 min read

Pic: 123rf.com

High volatility in Indian cotton yarn prices in recent months has disrupted the entire value chain of the textile industry. So, to improve price predictability, the Textile Advisory Group (TAG) has proposed development of Yarn Index System. The proposal was discussed at the second interactive meeting of the TAG held in Mumbai on Thursday.

The TAG comprises senior officials from the Union ministries of textiles, agriculture & farmers’ welfare, commerce, as well as senior officials from the Cotton Corporation of India, R&D experts and stakeholders. The first meeting of the TAG was held on May 30, 2022, also in Mumbai, under the chairmanship of textiles and commerce minister Piyush Goyal.

Earlier, when cotton prices were touching new highs, high prices squeezed profit margins in downstream industries amid poor demand of end products in international and domestic markets. But the market trend reversed in June 2022, when cotton prices dropped drastically. This placed the upstream industry in a sticky situation. Industry representatives raised their concerns and said that such volatility is not good for the textile industry.

After detailed discussion, TAG proposed development of a Yarn Index System to improve predictability and reduce fluctuations in prices. It was also acknowledged that data was critical for improving policy formulation process. There were suggestions of penal action to be taken on units not onboarding the textile commissioner’s portal. Confederation of Indian Textile Industry (CITI) had advised on this issue last month.

TAG decided that steps should be taken for faster approval of new Bt cotton seed varieties to improve cotton yield. The meeting also suggested for a policy to discourage poor quality cotton and to provide premium for cleaner cotton.

It was decided that the Cotton Association of India (CAI) will formulate a policy to encourage ginners to adopt better ginning practices. Further, steps will be taken for state-of-the-art testing to ensure quality and traceability of cotton products.

The meeting also discussed the long-pending demand from downstream industry to ban or discourage future trading in cotton. TAG will suggest the government to reduce speculative activity in MCX through industry and farmer representation in the product group and transparent specific delivery contracts.

Fibre2Fashion News Desk (KUL)

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