People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 49

December 05, 2010


The Indian Cotton Trade


S P Rajendran


"The continual rise in the prices of raw cotton begins at last to seriously react upon the cotton factories, their consumption of cotton being now 25 per cent less than the full consumption. This result has been brought about by a daily lessening rate of production, many mills working only four or three days per week, part of the machinery being stopped, both in these establishments where short time has been commenced and in those which are still running full time, and some mills being temporarily altogether closed. In some places, as at Blackburn, for instance, short time has been coupled with a reduction of wages..."


Karl Marx started with these words his article, "The British Cotton Trade," which was published in the New York Daily Tribune on September 21, 1861.


The same situation is prevailing in the Indian cotton trade now.


The UPA government at the centre has allowed cotton exports from November 1. As shipments resumed, a major portion of the commodity is heading towards China, Bangladesh, Pakistan and Indonesia, and the rest is going to the international speculative markets based in various cities of the USA and Europe.


World cotton cash and futures prices have surged in the past month, showing extraordinary volatility and exceeding all previous historical records. Several developments have contributed to this run-up in prices, including the decreased world production in the three previous seasons; adverse weather damaging the cotton crop in China and Pakistan, and speculative pressures from the New York market.


In this background, world market wants more cotton imports from India, which is expected to produce more this year. Production of cotton in India, the second biggest producer and exporter of the fibre, may reach a record 37.5 million bales, above the September estimate of 34.5 million and the last year’s output of 29.5 million bales.


Underlining the highly volatile situation in the world cotton trends, Indian cotton industry alarmed the central government to preserve the raw material in order to avert the scarcity in the domestic market. There are 1834 big spinning mills, 1249 small scale spinning mills, 184 exclusive weaving mills, nearly 5 lakh powerloom units and lakhs of handlooms units throughout India. The Rs 55,000 crore textile industry of the nation is one of the most labour intensive industries and employs crores of people.


The very life of the industry and its workers is now under attack due to the unprecedented and continuing rise in the prices of cotton and cotton yarn. This is because of the blind policy of the government on raw material exports.


The most common Shankar–6 variety of cotton is trading at Rs 44,000 per candy (I candy = 356 kg) now, compared to Rs 23,000 in the same period last year. The price hit a record high of Rs 46,200 earlier this month. This near doubling of the cotton prices has caused an increase in yarn prices, imperilling the powerlooms and handlooms as well as the hosiery and garment sector. The price of 40s combed cotton yarn for hosiery, a widely used category, has risen from Rs 185 per kg in August to a record Rs 240 kg. As a result, fabric prices have also shot up 38 to 90 per cent, leading to higher prices of apparel products.


In Tirupur, production dropped 15-20 per cent due to the frequent rise in yarn prices in the last six months. Around 25,000 workers have lost their jobs.


So there is no way other than banning cotton exports to control the rising prices in the domestic and export markets.


The entire textile industry in India and the trade unions have put forward this demand to the government. Major organisations in the industry like the Confederation of Indian Textile Industry (CITI), South India Mills Association (SIMA) and South India Spinners Association (SISPA) based at Coimbatore; TEA, TEAMA, SIHMA, KNITMA, and TEKPA all based at Tirupur; Clothing Manufactures Association of India, Ahmadabad; South India Textiles Manufactures Association (SITMA), Erode, which is representing powerlooms in India; Kerala Textile Export Organisation, based at Kannur, the major hub of the industry in Kerala; Federation of Hosiery Manufactures Association (FOHMA), based at Kolkata --- all are demanding an immediate halt to the cotton exports.


They blamed the government’s announcement permitting cotton exports even before the new crop reached the market for paving the way for this unprecedented increase in cotton prices and causing an artificial scarcity of cotton. "The future of the entire textile industry, particularly the hosiery, apparel, knitwear, powerlooms and handlooms are at stake and millions will be jobless in the country if necessary action is not taken," they warned.


To save the industry and the interests of the workers, the Communist Party of India (Marxist) and the West Bengal chief minister Buddhadeb Bhattacharjee raised this issue with the centre. On November 16, Buddhadeb wrote to the prime minister seeking a ban on cotton exports from the country and saying that the commodity was needed to meet the domestic demand and to protect the employment of millions engaged in the textile industry.


G Ramakrishnan, Tamilnadu state secretary of the Communist Party of India (Marxist), has demanded that the government put cotton under the Essential Commodities Act in order to curb the futures trading in cotton. He charged that the government policy of exporting cotton, without maintaining sufficient stock for meeting the domestic cotton requirement, was responsible for the current scenario.


Even though the situation is alarming, political issues of unprecedented corruption in 2G spectrum and CWG are keeping the UPA government busy without any time to concentrate on other affairs. Union minister for textiles Dayanidhi Maran is not ready to address the cotton crisis issue and is busy in getting his own name cleared in the spectrum scam.


So to press their demand, the entire garment industry of the country went on a nationwide strike on November 19. The strike which was pan-India, saw the manufacturing activity in Tirupur, the knitwear capital of the country, come to a standstill, while Bhiwandi, Asia’s largest handloom cluster, witnessed a complete shutdown. Hosiery units in West Bengal and textile and apparel clusters in Coimbatore, Ludhiana, Ahmadabad, Bangalore, Delhi, NCR Region, Erode, Karur and Kannur experienced total strike. 0


This nationwide strike has been observed within one and a half months of the regional 48 hour bandh on September 24 and 25, observed at Tirupur. More than one lakh people, keeping their political differences in abeyance, gathered to fast in Tirupur on the same day, organised jointly by all the manufactures’ organisations and trade unions including the Centre of Indian Trade Unions.


This is the second warning from Tirupur!