The South India Mills’ Association (SIMA) plans to promote Colombo as a hub from where international sellers and shippers can stock cotton as well as supply it to mills in South India, it has been officially announced.
The move is expected to bring down the transport cost of cotton substantially for mills in Southern India as compared to costs incurred presently in transporting cotton grown in Gujarat and Maharashtra, according to a SIMA delegation which had visited Sri Lanka recently, in connection with the move.
If SIMA’s plans succeed, textile mills in South Indian states are expected to import more cotton this year for the October 2016 to September 2017 period. This move is also expected to bring stability to cotton prices in India, if the Colombo port facility becomes operational by December, sources said.
The SIMA delegation sought 30 days storage of containers with free demurrage. This would enable cotton not only from Africa but also other parts of the globe, to be stored at the Colombo port, from where it could be shipped to textile mills in South India as well as other South Asian countries, based on demand.
SIMA has invited a delegation to visit Coimbatore to have a meeting with textile mills, cotton traders and sellers to ensure that the Colombo port facilities are made operational by December, sources said.
Presently, around 50 per cent of India’s spinning capacity is in Southern India, but the logistics cost is against mills in that part of the country, since cotton has to be transported from Gujarat and Maharastra.
At the moment, shippers typically bring cotton to Malaysia and supply it to buyers in South Asian countries. The transit time which takes three to four months at present, would decrease considerably, if the cotton is stocked at Colombo port.
It has also been pointed out that cotton merchants need the flexibility of selling to the Indian market besides other markets throughout the year.
Countries like Bangladesh and Vietnam buy imported cotton throughout the year and Colombo is at an advantage because of its connectivity to Karachi, Chittagong, Singapore and Vietnam, sources said.