Govt scraps import duty on raw cotton

Madanlal J Hinduja, CMD, Gokaldas Export feels that the government’s move will definitely bring down prices a bit.

Excerpts from CNBC-TV18’s exclusive interview with Madanlal J Hinduja:

Q: What does it mean, this cut that been brought about in import duty? How does it translate to you in terms of a benefit?

A: There was an acute shortage of cotton in India market because in the last season most of it was exported. This is why we are feeling the crunch and prices were shooting up. Obliviously, the textile trade approached the Ministry to reduce the import tariffs and this move will definitely bring down the prices a bit.

Q: What is the global price of cotton and given a depreciating rupee, will it be really beneficial to import cotton?

A: Yes, it makes sense as Pakistan is having cheaper cotton than India at the moment.

Q: What is the price differential, if you could highlight that for us?

A:  We were having a cotton candy price of a ‘goni’ (sack) about Rs 19,000-20,000 per candy, which had shot up to Rs 30,000 per candy now. The price shooting up 30-35% is big jump.

Q: What are the prices in Pakistan right now?

A: It should be somewhere about Rs 22,000-23,000 per candy.

Q: How are cotton prices looking to you for the rest of this season? The new crop is October or November. How does the new cotton season look to you? Are prices likely to soften at all?

A: I don’t think so because Maharashtra and the hinterlands haven’t had any rains nor Punjab has had sufficient rains. So one cannot be very optimistic on having a very good crop ahead.

Q: Are these early days? You expect the situation to improve?

A: Yes, if the monsoon improves immediately the definitely we are going to be more optimistic.