The industry will now be able to use this transhipment facility to source its raw material requirement without too much of a lead time, said industry sources.
Hailing the Ministry of Shipping’s initiative, the Chairman of the Southern India Mills Association M Senthilkumar said the provision of the facility would bring stability in cotton prices as imported fibre would be available on demand, which in turn would help mills prevent loss on account of price volatility and currency fluctuation.
MSME units will now be able to have direct and daily access to the raw material, he said and recalled the difficulty the industry faced in procurement of cotton. The state’s annual requirement of cotton is around 120 lakh bales, but the production is just about 5 lakh bales a year. The mills here, therefore, depend on upcountry and imported cotton for processing into yarn. Cotton prices tended to move in a volatile band following the removal of the fibre from the Essential Commodities Act in 2007.
The past two years proved tough as the demand for imported cotton soared and with it, the prices moved north as mills faced some quality issues in domestic cotton. Import of the fibre was also not easy. Only the large mills with financial strength and volume requirements managed.
Further longer lead time and currency fluctuations impacted the unit’s operating profit.
The association tried its best to facilitate coastal movement of cotton to reduce transport cost as also impress upon the need for creation of a Free Trade Zone (FTZ) facility at Tuticorin. A direction was issued for coastal movement of cotton between Gujarat and Tamil Nadu. “We envisaged a volume of 25 lakh bales, but could manage only 10 lakh bales as quality issues arose in the last two years,” Senthilkumar said.
A VOC Port Trust release said that the facility would accommodate around 500 TEUs of 40-feet container.
In the second phase, a Free Trade Warehousing Zone (FTWZ) will be established with world-class infrastructure for warehosuing of raw cotton, transportation and handling facilities, commercial office space, water, power, communication and connectivity with one stop clearance of import and export formality to support the integrated zones as “international trading hubs.” it said.