Varanasi: As the textile industry faces the soaring cotton prices, the special reserve fund created by the Khadi and Village Industries Commission (KVIC) saves all the Khadi institutions across the country from the price rise.
The reserve fund has ensured that the Khadi institutions in the country remain unaffected by the price rise and the prices of Khadi cotton apparels also do not go up.“The special reserve fund would save both the Khadi institutions and the Khadi buyers from any adverse impact of price rise”, the KVIC chairman Vinai Kumar Saxena told TOI.
Saxena said that a policy decision taken by the Khadi and Village Industries Commission (KVIC) in 2018, to create a special reserve fund to deal with market fluctuations and other eventualities, has come as a savior for all Khadi institutions across the country, just when the entire textile industry is grappling with a steep price hike of the raw cotton.
In 2018, KVIC had decided to create a Products Price Adjustment Account (PPA), a reserve fund for its five central sliver plants (CSPs), to meet market-driven eventualities. These CSPs are purchasing cotton and converting it into sliver and roving for the supply of Khadi institutions, which convert it into yarn and fabric. The PPA fund was created by transferring just 50 paise to it from each kilogram of the total sliver/roving sold by these CSPs.
“Three years down the line, when the entire textile sector is facing the brunt of short-supply and a steep hike in the price of raw cotton, KVIC has decided not to increase the cost of sliver/roving being supplied to the Khadi institutions by its sliver plants across the country despite the cotton prices surging by over 110%. Instead, the KVIC will bear the excess cost of Rs 4.06 crore on procurement of raw cotton bales at the increased rates from the PPA Fund,” said Saxena.
The price of raw cotton has increased from Rs 36,000 per candy to Rs 78,000 per candy (each candy weighs 365kg) in the last 16 months. This has put a direct impact on production of cotton apparels by major textile companies across the country, which have also reduced the production by 30 to 35% in the recent months.
This decision of KVIC, which has been taken for the first time to create such reserve fund, comes as a big relief for over 2,700 registered Khadi institutions and over 8,000 Khadi India outlets that are already grappling with production & marketing challenges due to restrictions imposed during Covid-19 pandemic. “Alone in the Varanasi division, there are 230 Khadi institutions and about 75,000 artisans are associated with them,” he said.
According to him, the KVIC largely purchases cotton bales from Cotton Corporation of India (CCI) for its five CSPs located at Kuttur, Chitradurga, Sehore, Raebareli and Hajipur, that convert various varieties of cotton into sliver and roving. The Cotton varieties purchased by KVIC are BB mod, Y-1/S-4, H-4/J-34, LRA/MECH, MCU_5 and DCH_32. The price difference reported in these days is from Rs 13,000 per candy to Rs 40,000 per candy of these varieties. The KVIC will require 6,370 cotton bales of different varieties by March 31, which, as per the current rate, will cost Rs 13.25 crore as against Rs 9.20 crore as per the old rates. The price difference of Rs 4.05 crore will be met from the PPA reserve created by KVIC in these days.
“Short supply of raw cotton from CCI and the consequent rise in price of cotton has hit the entire textile industry including Khadi. But KVIC has decided to continue the supply of roving/sliver to Khadi institutions at the old rates so as to mitigate any financial burden on the institutions.It will also benefit crores of Khadi buyers as there will be no increase in the price of Khadi fabric and garments. It is KVIC’s commitment to every Khadi buyer to provide Khadi at affordable prices in tune with the PM’s vision of ‘Khadi for Nation’”, Saxena said.
Khadi has nearly 9% share in the textile industry and produces nearly 150 million sqmt fabric per year. With this decision, Khadi has emerged as only entity unaffected by price rise of cotton. Khadi buyers and Khadi institutions, thus, have a reason to rejoice.
The reserve fund has ensured that the Khadi institutions in the country remain unaffected by the price rise and the prices of Khadi cotton apparels also do not go up.“The special reserve fund would save both the Khadi institutions and the Khadi buyers from any adverse impact of price rise”, the KVIC chairman Vinai Kumar Saxena told TOI.
Saxena said that a policy decision taken by the Khadi and Village Industries Commission (KVIC) in 2018, to create a special reserve fund to deal with market fluctuations and other eventualities, has come as a savior for all Khadi institutions across the country, just when the entire textile industry is grappling with a steep price hike of the raw cotton.
In 2018, KVIC had decided to create a Products Price Adjustment Account (PPA), a reserve fund for its five central sliver plants (CSPs), to meet market-driven eventualities. These CSPs are purchasing cotton and converting it into sliver and roving for the supply of Khadi institutions, which convert it into yarn and fabric. The PPA fund was created by transferring just 50 paise to it from each kilogram of the total sliver/roving sold by these CSPs.
“Three years down the line, when the entire textile sector is facing the brunt of short-supply and a steep hike in the price of raw cotton, KVIC has decided not to increase the cost of sliver/roving being supplied to the Khadi institutions by its sliver plants across the country despite the cotton prices surging by over 110%. Instead, the KVIC will bear the excess cost of Rs 4.06 crore on procurement of raw cotton bales at the increased rates from the PPA Fund,” said Saxena.
The price of raw cotton has increased from Rs 36,000 per candy to Rs 78,000 per candy (each candy weighs 365kg) in the last 16 months. This has put a direct impact on production of cotton apparels by major textile companies across the country, which have also reduced the production by 30 to 35% in the recent months.
This decision of KVIC, which has been taken for the first time to create such reserve fund, comes as a big relief for over 2,700 registered Khadi institutions and over 8,000 Khadi India outlets that are already grappling with production & marketing challenges due to restrictions imposed during Covid-19 pandemic. “Alone in the Varanasi division, there are 230 Khadi institutions and about 75,000 artisans are associated with them,” he said.
According to him, the KVIC largely purchases cotton bales from Cotton Corporation of India (CCI) for its five CSPs located at Kuttur, Chitradurga, Sehore, Raebareli and Hajipur, that convert various varieties of cotton into sliver and roving. The Cotton varieties purchased by KVIC are BB mod, Y-1/S-4, H-4/J-34, LRA/MECH, MCU_5 and DCH_32. The price difference reported in these days is from Rs 13,000 per candy to Rs 40,000 per candy of these varieties. The KVIC will require 6,370 cotton bales of different varieties by March 31, which, as per the current rate, will cost Rs 13.25 crore as against Rs 9.20 crore as per the old rates. The price difference of Rs 4.05 crore will be met from the PPA reserve created by KVIC in these days.
“Short supply of raw cotton from CCI and the consequent rise in price of cotton has hit the entire textile industry including Khadi. But KVIC has decided to continue the supply of roving/sliver to Khadi institutions at the old rates so as to mitigate any financial burden on the institutions.It will also benefit crores of Khadi buyers as there will be no increase in the price of Khadi fabric and garments. It is KVIC’s commitment to every Khadi buyer to provide Khadi at affordable prices in tune with the PM’s vision of ‘Khadi for Nation’”, Saxena said.
Khadi has nearly 9% share in the textile industry and produces nearly 150 million sqmt fabric per year. With this decision, Khadi has emerged as only entity unaffected by price rise of cotton. Khadi buyers and Khadi institutions, thus, have a reason to rejoice.