The Commerce and Industry Ministry has announced restoration of incentives on export of cotton and cotton yarn following a sharp fall in domestic and international prices of the commodities.

The decision to restore the Duty Entitlement Pass Book (DEPB) scheme on cotton yarn would be with a retrospective effect from April 2011 and on cotton from October 2010, the Commerce and Industry Minister Mr Anand Sharma said.

“I have taken a composite review of the cotton and cotton yarn industry over the last few days. Both of these segments have faced huge fluctuation in the international and domestic prices,” the Minister said.

He said the government policy has been calibrated over the last one year. Cotton yarn has been placed on Open General Licence (OGL) for exports from April 2011. Therefore, the DEPB, tax refund scheme for exporters, has been made effective from that date.

On the issue of DEPB benefits for cotton, Mr Sharma said “in the last cotton year, cotton exports were dis-incentivised by virtue of export tax which was in place, which has since been dismantled with effect from October 1, 2010. Clearly, the policy intention of the Government was not to dis-incentivise exports after that cut-off date and I have now taken a view to restore DEPB benefit on cotton from that date.”

Prices took a reverse turn by end of March and fell sharply both in the global and domestic market.

However, export restrictions remain on export of cotton, which can be exported up to 65 lakh bales this year.

After peaking at Rs 62,500 per candy (356 kg) during March end in the domestic market, cotton prices have crashed to Rs 31,000 per candy now.

Related Topics
comment COMMENT NOW