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SIMA welcomes Direct Payment Deficiency System


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Southern India Mills' Association

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Southern India Mills’ Association’s Chairman, M. Senthilkumar has hailed the Government, principally, Santhosh Kumar Gangwar, Minister of State for Textiles (Independent Charge) and Ministry of Textiles for considering the plea made by the association and its plan to introduce Direct Payment Deficiency System (DPDS) to help farmers get better realization for their produce when the market rates rule below the MSP.

The Textile Commissioner has announced the launching DPDS during the current season at Hingenghat Taluk in Maharashtra on a pilot basis. On this, SIMA Chairman has opined that the introduction of DPDS through Agricultural Produce Market Committee (APMC) will greatly benefit the farmers and the industry.

Also ReadSIMA urges for farmer-cum-industry-friendly cotton trading policy

M. Senthilkumar, Chairman, SIMA said, “During the earlier season, the industry had to pay Rs. 2,000 to Rs. 3,000 higher than the regular price for the cotton when compared to the international price and particularly mills in Telangana and Andhra Pradesh (cotton producing States) had to source cotton from other States as CCI suspended sale during the cotton season between March and May 2015.”

He further added, “China Cotton Reserve Corporation incurred huge losses due to MSP operations and therefore, has introduced Direct Benefit Transfer System from the last cotton season. DBT system has enabled Chinese spinning sector to source cotton at market prices.” Kumar hopes that a similar scenario will soon be created in India and a win-win strategy for the farmers and the industry apart from reducing losses to the Government will also be fashioned.

A press release from SIMA states that the cotton-based textile industry in the country has been facing severe crisis in the recent years mainly due to the volatility in cotton prices which accounts for 60 to 65% of the cost of production. The industry faced worst ever crisis in the history of 150 years during 2010-11 due to abnormal volatility which eroded working capital to the tune of Rs. 11,000 crores in three months. One of the main factors contributing price volatility was MSP operations exercised by Cotton Corporation of India (CCI). The MSP operations have been causing damages to the Central Government due to high interest cost, carrying cost, overheads incurred by CCI and also to the industry due to volatility in the prices. Confederation of Indian Textile Industry (CITI) and SIMA have been insisting the Government to introduce Direct Benefit Transfer System in lieu of MSP operations and pay the price difference between MSP and market price directly to the farmers whenever market prices rule below the MSP.

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SIMA Chairman has also requested the Government, particularly the Textile Commissioner foreseeing implementation of the scheme on a pilot basis to design a suitable system and make the scheme successful.


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