Indian textile industry’s representatives are of the opinion that new contract specifications of MCX cotton futures trading will benefit all the stakeholders.
Based on the recommendations made by the Product Advisory Committee and on the approval of SEBI, Multi Commodity Exchange (MCX) launched the new contract on 13th February 2023.
To create awareness among the stakeholders the MCX conducted its workshop in Coimbatore.
Chairman, CITI and Chairman of Product Advisory Committee of MCX, T.Rajkumar and SIMA Chairman, Ravi Sam stated that under the free market economy, it has become essential for all the stakeholders across the textile value chain to take an active part in the cotton futures trading on MCX platform to reduce the risk and take advantage of the price discovery.
As per them, the revised cotton contract specifications have taken into account the various concerns of the stakeholders like farmers, ginners, traders, spinning mills and downstream sectors in the entire textile value chain including readymade garments.
It is pertinent to mention here that the exporters had to often face problems due to price volatility as they had to make price commitments for 3 to 4 months.
The fabric, garment, and made-up manufacturers had been seeking the intervention of the government to control the cotton and yarn prices as the same have been severely impacting the industry.
The volume of business on the MCX platform was only around three lakh bales as against the industry consumption of 300 to 320 lakh bales and the country’s cotton production of 340 – 360 lakh bales per year. The physical delivery was negligible and therefore, the participation from the spinning mills was absent.
CITI and SIMA are hopeful that the new contract specifications would bring a greater volume of cotton into trade, increase liquidity and benefit all the stakeholders.
It is being said that the two more pending specifications in the MCX cotton futures relating to daily price limit and depositors’ default penalty would be reduced in the coming months to control any speculation in the price.
