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G. Gurumurthy

Coimbatore , Sept. 25

WITH a prediction of an easy cotton season when the domestic crop this year isanticipated to squarely meet the demands of the industry, the issue of bringing cotton imports under a mandatory Indian arbitration has surfaced again among the members of the spinning industry.

But the central issue now seems that in the event of the Liverpool Cotton Association (LCA) failing to concede to the changes in its cotton arbitration rules and regulations sought by Indian importers, whether the domestic industry would be prepared to hold together and stand for the mandated Indian cotton arbitration process? This question too has found echo in a session on `Recent developments in cotton arbitration' that got underway here under the auspices of the Southern India Mills Association.

The issue of evolving a mandated cotton arbitration to cover importers stand-point has assumed importance in the wake of repeated attempts by domestic spinners under the aegis of the Indian Cotton Mills Federation (ICMF) to prevail upon the LCA board to get the Indian importers grievances redressed in the LCA cotton arbitration rules. LCA, which has been stubbornly refusing to change its rules relating to arbitration clauses, is expected to hold one more round of deliberations in its board meeting to be held next month on the importers pleadings.

``What we feel is that bringing out a mandated Indian cotton arbitration is not impossible but before proceeding towards that the industry should strike a consensus whether it could stand united and implement it,'' said Mr D.K Nair, Secretary-General of ICMF, who chaired the session on cotton arbitration. ICMF, in coordination with various cotton industries association, has taken up the issue of evolving an Indian cotton arbitration framework with the Union Government.

The determination from the industry and cotton importers on this issue is a must because there has been resistance among American cotton shippers who dominate LCA to an Indian-mandated cotton contract and arbitration procedures. These shippers will not be willing to sell under Indian mandated contract, which the importers should be able to withstand from the trade point of view.

Referring to the recent domestic textile industry-initiated interaction with LCA on removing the seller-biased components in arbitration clauses and accommodating the buyers' interests in the contract provisions, the SIMA Vice-Chairman, Mr S.V. Arumugham, felt that there had been not much of a climbdown on the part of LCA. Though there has been some suggestions from LCA in response to the Indian requests such as a third member in the LCA arbitration panel in addition to the present two-member panel to balance it with an `umpire' in the event of opting for an Indian cotton arbitration. But the main plea to standardise all problems the buyers face in the seller-biased LCA arbitration clause which does not differentiate the deals between trader and spinner with that of the trader-to-trader remains unaddressed, opined Mr Arumugham.

The textile industry feels that current year would be the right time to strike a mandatory Indian cotton contract and arbitration rule as it may not depend much on imports with a bumper cotton crop anticipated this year. On the process of handling the Indian-mandated cotton import arbitration, the ICMF Secretary-General held the view that a separate body, outside the ICMF, could be set up to undertake the cotton arbitration. ``Either the LCA has to change its arbitration rules to take into account the Indian importers view points or if the changes from the LCA are not satisfactory, we have to find an alternative mandatory arbitration rule for which the Federation is working simultaneously,'' Mr Nair said.

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