The Cotton Association of India (CAI) is opposed to the creation of any buffer stock. It says, the creation of a buffer stock system would require a total investment of about Rs 16,000 crores for procuring the desired 80 lakh bales of cotton, which in turn will involve a total recurring expenditure of hundreds of crores a year by way of carrying cost including interest and warehousing cost. In addition to this, the CAI would have to bear the loss that may arise due to a fluctuation in prices.

The textile industry wants a directive to be given to the CAI to procure 70 to 80 lakh bales of cotton in the peak season and retain it as buffer stock and sell this quantity only to actual users during May-September.

CAI says the idea of a buffer stock for exclusive use by a certain sector is wrong, as it will not only distort the market, but will also unsettle other sectors of the cotton value chain. Since India is a huge cotton surplus country, and cotton is available to Indian mills at their doorstep, there is no reason for India to create any buffer stock. If the problem is non-availability of funds with textile mills to buy and stock cotton, it would be appropriate to address this through banking channels.