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Indian textile mills and foreign cotton suppliers may end up locking horns as there are grim chances of compromise amid sharp decline in prices and gain in US dollar against the Indian rupee. Tamil Nadu Spinning Mills Association (TASMA) has hardened stance after the International Cotton association (ICA) rejected its request for cancellation of contracts.
“We are planning to blacklist such suppliers who are not willing to make the invoicing back on actual losses and refusing to cancel the contract by paying back the advance amount received by them,” Dindigul (Tamil Nadu) based TASMA’s chief adviser Dr. A Venkatachalam told Fibre2Fashion through mail.
Indian textile mills and foreign cotton suppliers may end up locking horns as there are grim chances of compromise amid sharp decline in prices and gain in US dollar against the Indian rupee. Tamil Nadu Spinning Mills Association (TASMA) has hardened stance after the International Cotton association (ICA) rejected its request for cancellation of contracts.
He said that a contract between two parties cannot have unilateral conditions and cannot be executed totally one-sided. It must balance the interest of both the parties.
TASMA is planning to discuss the issue with its members on July 30, 2022. The trade body will announce a strong decision to the ICA as well as to the suppliers and shippers.
Venkatachalam said that the draft rules, which were framed under the bylaws of ICA, and the way the suppliers/shippers follow them, completely go against the concept of ‘Rules of Fair Practice’. It cannot be anymore allowed in the same manner.
TASMA is not satisfied with the reply sent by ICA on its previous communication. The body felt that ICA did not respond its concerns raised in the letter. In a letter, TASMA had said that there was no provision of compensation in the contract on account of inordinate delay. High volatility in cotton prices and exchange rates reversed market conditions because of inordinate delay on the part of suppliers. The importing mills could not consume cotton and supply yarn to their buyers as per plan because they did not get deliveries even after waiting for four months.
TASMA has demanded modification in draft rules of the contract to maintain a reasonable balance in the interest of buyers and sellers. “One sided draft of rules is against natural justice and growth of the sector,” it said.
Fibre2Fashion News Desk (KUL)
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