Indian textile mills are pinning their hopes on the fourth quarter to overshadow the impact of demonetization over the third quarter. The new terms and conditions of fully pressed bales of CCI (Cotton Corporation of India) facilitates the registered MSME textile units to procure cotton by paying only 10 per cent deposit money as against 20 per cent which is applicable only for the sale quantity of 30,000 bales and above. The industry has welcomed the move.
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Earlier there was a difference in the free period ranging from 30 to 75 days and 75 days free period was available for the procurement of 15,000 bales and above, which led to MSME textile units’ inability to derive much benefit out of CCI. “However, now the free period has been made uniform and fixed at 45 days which would again help the actual users and the MSME units,” said M Senthilkumar, Chairman, Southern India Mills’ Association (SIMA).
It may be noted that more than 75 per cent of the cotton arrives the market during December to March period and around Rs. 60,000 crore is required to procure the seed cotton during this period. Since the ginning and spinning mills do not have such funds, the farmers invariably get lower price.