Various industry bodies, including the Confederation of Indian Textile Industry and the Apparel Export Promotion Council have urged the ministry to release the bought cotton. According to trade sources, multinational corporations have also cornered a huge quantity of around three million bales.
The shortage has reflected on cotton prices in the domestic market. The benchmark Shankar-6 in the spot market here has risen 8.4 per cent from Rs 34,600 a candy (356 kg each) on February 15 to Rs 37,500 a candy today.
Ramaswami says the rising prices are increasing the cost of textile manufacturing unnecessarily, hitting profitability due to the thin two-three per cent margins the mills operate on.
Meanwhile, domestic textile mills have intensified import of cotton from West Africa and contracted for around 20,000 bales in the past three-odd weeks. As a result, import is expected to rise to two mn bales this year as compared to 1.2 mn bales last year.
Indian textile mills have been paying a premium of at least five cents a pound premium for West African cotton over what could have been bought at home if CCI and Nafed released their stock. Exporters are also relying on import to meet the export commitment.
The Cotton Advisory Board (CAB) under the ministry has estimated 3.46 mn bales of carryover cotton stock in the 2012-13 season, substantially higher from the 2.86 mn bales the previous year.
CAB forecast India's output at 33.4 mn bales in the current season, substantially lower than 35.3 mn bales in the previous one. Mill consumption of cotton has also been estimated higher at 23 mn bales this year from 21.7 mn last year.
On yarn, Ramaswami said export registration of the raw material had stopped due to the cotton shortage. He hoped the situation would normalise after the West African cotton import gets over, expected in about 40 days. By then, there would be an unrecoverable loss of around $1 bn, he said.