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MUMBAI, Sept 22 (Reuters) - India is unlikely to revise or roll back the increase in the minimum support price (MSP) for cotton, union textile minister said on Monday, a decision which may push up imports of the fibre in the next cotton year.
Early in September, India raised the MSP of the popular medium staple fibre by up to 40 percent to 2,500 rupees per 100 kg, raising concerns the textile industry may be hit by high input costs.
“The rise (in MSP) is steep, still it was necessary for the benefit of the farmers,” Shankersinh Vaghela, said on the sidelines of a textile seminar.
“There will be no roll-back on the MSP,” he added.
MSP is the minimum price that must be paid to the farmers for their produce. Cotton prices rose to a record in July, following huge demand in the exports market.
The government then scrapped the import duty on cotton and removed incentives on exports in an attempt to tame rising prices and boost supplies in the local markets.
“Domestic users will not have any problem with the hike in MSP. The can buy locally or import,” Vaghela said.
The minister also said exports of all textile and textile products may rise by as much as 18 percent on year in 2008/09.
“Last year, exports dipped because of the appreciating rupee but now with the rupee depreciating again against the dollar we expect higher exports,” he said.
Vaghela said India would continue to see healthy exports to both Europe and the U.S. Both destinations account for majority of textile exports from India. (Reporting by Aniruddha Basu; Editing by Ramya Venugopal)