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The cotton sector never ceases to be in the news. Whether it is expanding fibre production, adoption of technology seeds, farmers’ suicides, woes of textile mills, export-import trade, or soaring prices, the ‘white gold’ has begun to attract global attention, with India now the second largest producer and exporter. However, the rapid expansion in output and burgeoning overseas trade runs the risk of a drastic slowdown in the season set to begin by Octobe r 2008. Aberrant weather and decline in acreage may dash the hopes of a repeat performance. This may necessitate a review of policies for the sector.

Buoyed by large-scale exports (over 65 lakh bales, from a total output of 315 lakh bales in the 2007-08 season), domestic cotton prices have risen by over 30 per cent in recent months. The cotton textile industry, hit by rising raw material costs, has lobbied hard for imposition of export restrictions. To its credit, the government has thought it wholly inappropriate to either ban exports or impose quantitative limits. It has, however, mandated the registration of export contracts with the Textiles Commissioner — in essence, cotton exporters have to obtain an ‘export licence’ (though not called as such) before effecting shipment. The system of export contract registration in vogue earlier (in oilseeds and extractions, for instance) was abolished several years ago, as part of trade liberalisation. Its reintroduction by singling out cotton flies in the face of Commerce Ministry’s professed stand on removing the administrative hurdles that hamper exports. But there is a silver lining. Monitoring of cotton exports is sure to provide vital data on quantity, price and direction of export. This will help formulate export strategies dynamically and scientifically. It goes without saying that sanctity and confidentiality of contracts registered with the designated authority must be strictly preserved.

New Delhi should take this opportunity look at the bigger picture. The entire cotton sector — with a long supply chain from primary producers to industrial users, and high-value addition — is starved of authentic data. Although textile mills are mandated to file monthly returns of cotton consumption with the Textiles Commissioner, they do so with a lag of several months, reducing the utility. Prompt availability of production, export and consumption figures will help fight disinformation and speculation. Given its economic importance in terms of incomes, employment and foreign exchange earnings, the cotton sector needs to plan its growth. Registration of export contracts can be the starting point in developing and strengthening the critical ‘soft infrastructure’ for the cotton sector. It will also make for better co-ordination among the Ministries of Agriculture, Commerce, Finance and Textiles and help them make effective policy interventions.

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