A central purchasing committee in Kerala to be formed which will replace private agencies and buy cotton directly from the market to provide it to government textile mills. This will ensure quality and transparency. A similar committee will be established for the sale of the yarn produced, said an official with the Directorate of Handlooms and Textiles.

Hence, Kerala Government textile mills will engage in the centralized purchase of cotton to ensure transparency and provide raw material before opening the mills

The panel will consist of managing directors of textile mills and director of the public sector Restructuring and Internal Audit Board (RIAB) will make the purchase decisions.

The setting up of a centralized mechanism was one of the major demands of the trade unions. In the past, middlemen used to supply cotton by giving kickbacks. Low quality of cotton resulted in the production of substandard yarn which had poor demand, said Vijayan Kunissery, general secretary of the Textile Federation (AITUC).

The high cost of cotton and low price for yarn has dealt the industry a double blow. The price of cotton has been steadily rising despite it being the production season in Maharashtra, the largest cotton-producing state. It hovers around `6,000 per quintal due to high demand for Indian cotton from neighbouring Asian countries.

Industries Minister A C Moideen held talks with trade union leaders to find ways to reopen the mills. The Minister had announced the mills would open on January 1. But administrative sanction for funds to purchase cotton and settle other dues was delayed by a month. The decision to allot Rs 15 crore on February 8 came at a time when trade unions were charting out the next stage of protests.

Textile mills which largely deal with the unorganised sector have been affected by demonetisation. Spinning and textile mills in the state have been closed for more than six months owing to the financial crisis. Lack of working capital and raw materials, inability to pay electricity charges, statutory liabilities etc. have affected the functioning of the mills.

Six mills have been closed down and many have seen layoffs in the last four months. Around 2,000 workers in the mills were affected due to the stalemate.