A spinners association from the south said small mills have decided to stop procuring in the face of an unprecedented hike in cotton prices.
Cotton price per candy has risen 53 percent in five months to Rs 1.15 lakh and mainly due to low production this year, South India Spinners Association president pointed out.
Meanwhile, the yarn price has increased by much less, from Rs 328 per kg in January to Rs 399 on May 21, J Selvan said, sparking a loss of Rs 50-60 per kg for mills.
Stating the absence of accurate data on the country's cotton yield, he said large traders and multinationals had purchased and stockpiled huge quantities of the raw material at the beginning of the cotton season.
"Even as some quantity has been exported, the steep increase in cotton prices has meant our members are not able to purchase due to shortage of working capital," Selvan said.
This comes despite textile minister Piyush Goyal urging that only surplus cotton be exported. With cotton prices more than doubling in a year, the garment industry wanted a short-term ban on the export of cotton and yarn, declaration of cotton as an essential commodity, and removal of the material from trading at commodity exchanges.
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