Prime Minister Manmohan Singh has convened a meeting on Wednesday on bailing out the textile industry following the surge in input costs due to a sharp hike in the minimum support price of cotton in September.
"The prime minister has called a meeting on the request of the textile ministry. I don't know much about the details. But I hope that something will be worked out for the industry," Agriculture Minister Sharad Pawar said on the sidelines of the International Potato Conference, adding that he would attend the meeting.
The Centre has increased the MSP of standard cotton (long staple) to Rs 3,000 per quintal for 2008-09 from Rs 2,030 in the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 per quintal.
Pawar said the government will intervene in the market when prices go below MSP. "Our policy is whenever market price goes below MSP, the government must intervene."
The industry has protested strongly against the MSP hike, saying domestic rates will skyrocket at a time when prices in global markets are declining.
The Confederation of Indian Textile Industry has cautioned that the hike in MSP will prompt domestic traders and millers to import cheaper cotton and exports may plunge by a half to about 50 lakh (5 million) bales (one bale is equal to 170 kg) in 2008-09 from 1 crore (10 million) bales last year.
India is projected to produce at least 3.20 crore (Rs 32 million) bales of cotton in the 2008-09 season.