It was a celebration summit for the Indian Cotton Board's tenth anniversary. But the mood was grim. There was little to celebrate, really. The chart on the screen said it all. India's per capita consumption of cotton fibre stood at 1.8 kg in 2002, on par with synthetic fibres. But as the chart's projections showed, cotton would dip to 1.6 kg in 2010, while synthetics would top 3 kg.

Mill owners, cotton traders, cloth merchants, exporters and garment marketers watched, agape. Their faces, sombre. The Board's President, Pankaj Kapur -- also Chairman of Swagat Cotton Mills -- had barely ended his plenary session speech that the hall erupted with howls of protest. The delegates were angry with the T.K. Singh Committee's proposal to end excise exemption for cotton, and tax it at the same rate -- 8 per cent on value-added -- as synthetics (which was to see its excise burden cut from 18.4 per cent).

'Danger' was flashing bright red, and the delegates wanted to get straight to the point: What was the Board's strategy against the onslaught? After a few minutes of commotion, Kapur gave in, and invited Manik Raj, the Secretary General, to kick off the strategy discussion. "I'm called the scare man," Raj began, "but let me tell you, I'm a great one for realism. 2001 was one of the worst years for the Indian cotton industry in recent times."

The tales of woe were well known. Business was down in the trough of its six-to-seven year demand cycle, and nobody quite knew if a recovery would follow the regular cyclical pattern this time. Non-cyclical threats had risen. In 2001, global cotton prices had touched a 30-year low. Margins collapsed, and exporters were trumped by Chinese and Malaysian mills. Global prices recovered slightly in 2002, but, as Roy John, a Delhi-based garment exporter, put it, "Export orders for the year were negotiated before the season began", so there was no gain. Textile makers, meanwhile, were concerned about futures trading in cotton -- and the quality of storage infrastructure.

But the big common issue for everybody was the polyester threat. People in countries such as India and China were adopting it by the million as a cheaper alternative to cotton clothing. T.G. Gupta, a cotton trader, put it bluntly: "Does a natural fibre stand a chance against an industrial product?"

The Board wasn't willing to surrender. "Like I said, I'm a realist," Raj said, "The polyester industry has consolidated capacities, and the returns-to-scale limit has not been reached, so costs are still falling. Last year, demand for cotton fibre in the domestic market grew by just 3 per cent to 1.8 million tonnes, compared to a 10-per cent growth in synthetic fibre, to 1.7 million tonnes."

The groans were audible. "The good news?" continued Raj, "Trends are trends, they can be reversed. That's my gut speaking. I'm not a great one for linear projections -- in which I take inspiration from Jack Welch. Like the time he debunked GE's nuclear power division's sales forecast..."

"How will the trend reverse?" Gupta broke in, "As subsidies decline, agriculture costs will rise, while polyester has excess capacity, resulting in these low prices -- will this situation change? We're losing investors to man-made fibres, and our business is looking like a relic from the colonial days."

Raj's response was crisp: "I know that. But let's not look for input subsidies and tax breaks. Any artificial crutch is self-defeating. Why? Because it distorts market reality. We're 'natural' players, and so our strategy should be to address demand, not supply."

There was a flutter in the hall. "What are you talking about?" scoffed Saurav Jain, owner of CottonPlus, a retail chain, "even well-paid executives are switching to crease-proof shirts and other 'ice cool' fabrics. Cotton is losing its premium edge, except perhaps for shirts advertised as pure Egyptian cotton.""

"Oh please, cotton is cotton -- don't exaggerate, and don't jump the gun," replied an unruffled Raj, before inviting Kapur to announce the Board's adoption of the world's best recognised Cotton Quality seal. The insignia flashed large on the screen.

"This will do for us what Woolmark did for wool," exulted Kapur. The applause this time was genuine. "This will ensure global-class quality for our cotton," Kapur continued, "and will help us start a campaign to market cotton as a natural fibre -- the only second skin worthy of a natural body."

"Ha!" went Jain. "Sounds like some touchy-feely jeans ad. In any case, I don't think romanticising cotton will work. It's a cost problem we've got. The consumer is price-sensitive."

"The consumer is sensitive, period," Raj shot back, "she can be touched, if we get our message right. I think it takes just two minutes to reposition natural fibre as a freedom fibre."

"I don't get it," said Jain.

Raj cleared his throat, ready to make the pitch of his life. "Man-made fibre may have some glitter, it may hold some people in awe, and may even be more accessible to the masses," said Raj, "But it's just a chemical creation, and has flaws that an enginee"r -- why, even you and I -- can actually sense. Polyester, for example, is non-absorbent. That's its formulaic limitation. Cotton fibre, on the other hand, is a natural wonder. It's beyond the scope of laboratories. It cannot be reduced to some formula or something. It's free of human intervention. So it doesn't just feel natural on our skin, it feels natural in our head. And once we shift the game to feelings, nature wins."

There was a hushed silence. One could almost hear people thinking. Or grumbling. "That's just a perspective," said Jain, at length.

"That's too fantastic an idea," said Gupta.

"I'm not even sure of the discerning crowd," said John. Raj didn't feel disheartened. The entire hall was with him in his objective, he knew. If he could sharpen his conviction skills, maybe they'd go with the finer details of his strategy as well -- instead of clamouring for external support.

Question: Will Raj's strategy prove effective?

1 2