The Hindu Business Line : Centre plans capping cotton exports

New Delhi, July 28 After having made registration compulsory for all cotton shipments, the Union Government is now considering quantitative restrictions on its exports.

There is a proposal now to fix a quantitative ceiling of 80 lakh bales (of 170 kg each) on exports of raw cotton for the current cotton year ending September 30.

The proposal was apparently discussed at a recent meeting of the Committee of Secretaries and it has been sent to the Agriculture Ministry for further comments.

The Agriculture Ministry is expected to come out with its views before the Commerce Ministry can proceed further on the move. The Agriculture Ministry is reportedly against any curb on exports and it has also opposed the removal of Customs duty on raw cotton imports.

However, the Centre may go ahead in view of setback to cotton sowing.

Officials stressed that the current curbs will not have any impact on the farmers since the new cotton season will begin in October only. They also said the proposed move was a short term measure.

On July 24, the Government made it mandatory for all cotton exports to be registered with the Textile Commissioner before their shipment.

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

These curbs have come within 20 days after the Government scrapped the 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. The textile industry has been lobbying for placing quantitative export restrictions on cotton as domestic prices began to soar.

Though the Cotton Advisory Board estimated exports at 65 lakh bales this season, the textile industry sees shipments around 100 lakh bales.

Besides exports, a rising trend in the global prices has also led to domestic cotton prices spurting.

For example, the popular cotton variety from Gujarat, Shankar-6 had been ruling around Rs 19,000 a candy (355.56 kg) in the last two years. But this year, it is being sold at an average price of Rs 23,500, a 24 per cent increase.

Again J-34 cotton is averaging around Rs 20,500 a candy against Rs 16,500 in 2006 and Rs 18,000 in 2007.

Cotton prices have been ruling firm despite estimates of a record production of 313 lakh bales. During the last two years, cotton production has been averaging above 300 lakh bales. However, cotton production could be affected next season as sowing this year, particularly in Maharashtra and Gujarat, have been affected due to delayed monsoon.