CCI sells cotton at discount

Chennai: Stuck with expensive stocks, Cotton Corporation of India has started offering a discount on bulk purchases by yarn mills. The corporation is likely to suffer losses on the discounted sales.

After procuring cotton for a higher Minimum Support Price, the CCI has been saddled with around 70 lakh bales of cotton. As the prices started falling due to sluggish demand, especially from coronavirus-hit China, the CCI found it difficult to liquidate its stocks.

The CCI has now decided to sell nine lakh bales procured last year at discounts ranging from Rs 3,200 to Rs 5,000 per candy of 355 kg, depending upon the quality of the cotton.

The corporation was earlier quoting Rs 46,400 per candy for 30 mm cotton of fair average quality. But this has now been brought down closer to the current market price of around Rs.40,500.

“The CCI has been quoting higher prices than the market price and practically there was no off-take except the mandatory purchases by the public sector spinning mills. The cotton industry has been pleading with the Ministry of Textiles to sell the cotton at market prices to have stability in the cotton market and protect the interests of the spinning mills and its downstream power loom and handloom sectors,’ said Ashwin Chandran, chairman, The Southern India Mills Association.

The discount will be available for bulk purchases starting from 500 bales going up to one lakh bales. The mills, which are largely small and medium-sized in nature, can procure only up to 10,000 bales at a time. Usually, quantities as high as one lakh are bought by traders. But they might not buy this cotton, which is still priced slightly higher than the market rate.

The industry is also concerned about the quality of the cotton as the CCI has offered discount on what it procured in 2018-19. Being biodegradable, cotton tends to lose its strength and colour with time.