The Cotton Association of India (CAI) has advocated premiums for cotton ginners to entice them to deposit their stocks at MCX godowns and enable legitimate dealers to engage on the exchange platform in an effort to increase liquidity for the MCX cotton contracts. The MCX new product committee accepted the CAI proposal at its meeting on Monday and decided to provide a premium that had not previously been offered.
The increase in shipping costs, fees, and handling costs, among other factors, led the industry to believe it was necessary. The MCX platform needed more liquidity for cotton contracts, according to CAI President Atul Ganatra. Ginners avoided depositing their inventories with MCX godowns due to higher charges and costs associated with storage there. The exchange had a lack of liquidity as a result.
“CAI had suggested that as a reward for storing cotton bales at the MCX godown, Indian ginners receive 650 per candy (356 lb). MCX and CAI will now decide the premium to be given to ginners for delivery charges of cotton deposited at MCX godowns,” Ganatra said following the meeting, which took place in Mumbai at the Textile Commissioner’s office.
The decision on premiums and discounts will be made by the three-member committee, which is comprised of representatives from MCX, CAI, and the Confederation of Indian Textile Industry (CITI). Additionally, CAI has suggested opening centers in Hyderabad, Adilabad, Guntur, Bhilwara, Raichur, and Salem in the states of Madhya Pradesh, Karnataka, Andhra Pradesh, and Telangana, Tamil Nadu.