MUMBAI, May 16: The Indian Cotton Mills Federation (ICMF) has expressed concern over the continued increase in cotton prices, which, it fears, will have a delirious impact on the financial working of mills.

In a statement issued on Friday, ICMF chairman D Lakshmi narayana swamy appealed to the textiles ministry not to permit any further export of cotton. The carry-over stock as at the end of September this year as worked out by the cotton advisory board at less than 20 lakh bales was barely sufficient to meet one-and-a-half month's consumption of the industry in the next season (1997-98), he added.

There was virtually no scope for allowing further exports during the 1996-97 season, he said, pointing out that between March and mid-May of the season, cotton prices had spurted by Rs 1,100 to Rs 2,400 per candy in respect of major varieties.

This apart, the industry was worried over an acute shortage of quality cotton developing. The industry had also been experiencing a gradual decline in the quality parameters of cotton.

The problem had been aggravated this year following the release of 12.30 lakh bales of cotton for exports. In addition, a quantity of 4.30 lakh bales had been allowed for exports representing a spillover of last year's quota.

Lakshmi narayana swamy noted that raw cotton exports to India's competitors would undermine this country's strength to boost exports of value-added products like yarn, fabrics, made-ups etc.

Any further exports of cotton would only fuel a further increase in the cotton prices, adversely affecting the economic viability of mills and erode their competitive strength in the external markets in exporting value-added products.

The industry had been suffering from a severe liquidity crunch, increasing the number of closed mills from 175 in April 1996 to 209 in March 1997.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.