The Hindu Business Line : Cotton export contracts need to be registered

New Delhi, July 23 Bowing to domestic textile industry demand, the Government has sought to place export restraint on cotton by stipulating mandatory registration (licensing) of contracts with the Textile Commissioner before their shipment.

The Directorate General of Foreign Trade (DGFT) has also said that cotton consignments should be cleared by Customs authorities only after verifying that the contracts had been registered.

This export restriction, which is bound to have a dampening effect on cotton exports, comes within a fortnight after the Government scrapped 14 per cent import duty on raw cotton and withdrew 1 per cent export incentive (duty drawback) to boost domestic supplies and soften domestic prices.

There has also been some lobbying for placing quantitative export restrictions on the commodity.

On the other hand, the Agriculture Minister, Mr Sharad Pawar, is understood to have written to the Finance Minister, Mr P. Chidambaram, that the Agriculture Ministry was against any export curbs on cotton. Mr Pawar had also sought review of the decision to abolish import duty on raw cotton.

Higher output

The Finance Ministry as well as the Commerce Ministry had said that they were not in favour of placing a ban on cotton exports. Both domestic production and exports of raw cotton have been on the rise in recent years.

India exported about 6.5 million bales of cotton in 2007-08. Cotton exports grew from 4.7 million bales in 2005-06 to 5.8 million bales in 2006-07. They are estimated to touch 8.5 million bales this fiscal.

However, production could take a hit in the forthcoming season given the extended dry spell across the peninsula and the consequent drop in cotton acreage.

The Confederation of Indian Textile Industry (CITI) Secretary General, Mr D.K. Nair, told Business Line that the industry body had urged the Government to introduce registration to facilitate better data collection on exports. “We want the Government to know how much cotton exports are going. Better data would help in policy intervention.”