The Government of India’s decision to refer to the Tariff Commission the question of fixing fair prices of cotton textiles should be welcomed inasmuch as this question has been causing much heartburn to the Government as well as to the trade and industry. It is true that the prices of certain varieties of cloth recorded a sharp rise following the scarcity of indigenous supply of raw materials and the consequent fall in production. This unloosed an uproar resulting in the industry accepting the voluntary ceiling of cloth prices, which has been operating for two months. However, the Government does not seem to be happy about the results and has been demanding a further cut in prices in view of the new crop arrivals. The Tariff Commission has been asked to undertake a comprehensive inquiry into the cost of production of various representative types of cloth and yarn and the fair ex-mill prices thereof. The Commission will also have to report on the capital structure, the investments and the fair returns thereon, bearing in mind the need for continuous rehabilitation and modernisation of the industry. The Commission is also expected to devise methods for effecting suitable adjustments from time to time of the fair ex-mill prices so as to allow for major fluctuations in the prices of raw cotton and other elements of cost of production. The trade is disgruntled at the moment over the margin of 15 per cent over the ex-mill prices fixed at the retail level. Therefore, the Commission has also to go into the cost of distribution. The Commission will be faced with an arduous task as there are numerous varieties of cloth and the cost of production varies from unit to unit depending on the size of the undertaking and the type of machinery used. And as the industry’s profits are generally low the Commission will have to see that the textile industry is able to stand on its own legs while implementing the urgently required rehabilitation programme. It must be remembered that unless the industry is given the freedom to nationalise and expand, production costs cannot be expected to come down. Hence the need to ensure reasonable profits to the industry. As was expected, the price stamping system has not worked in the interests of the consumers. It is therefore to be hoped that the inquiry will provide the Government with an opportunity not only to enlighten itself but also to correct its attitude towards the industry and the trade. The inquiry may take more than six months and it is hoped that the Commission’s recommendations will put an end to all uncertainties which surround the cotton textile industry.
9th December 1960
