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Govt lifts restrictions on cotton exports

Govt lifts restrictions on cotton exports
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First Published: Sun, Jul 31 2011. 03 13 PM IST
Updated: Sun, Jul 31 2011. 03 13 PM IST
New Delhi: Amid abundant availability and a crash in prices, the government on Sunday removed restrictions on the export of cotton and permitted shipments under open general licences (OGL) for the remainder of the current season.
The cotton season runs from October to September. Cotton exports for the remaining two months (August and September) have now been put under OGL, commerce secretary Rahul Khullar told the news agency.
“Now, exporters only have to register with the Directorate General of Foreign Trade (DGFT),” he said.
The issue came in for review at a meeting of secretaries in the ministries of commerce, textiles and agriculture, convened by commerce and industry minister Anand Sharma here last week.
In October last year, the government had capped cotton exports at 55 lakh bales (170 kg each) to protect the domestic textiles industry in the face of rising raw material prices. An additional 10 lakh bales were permitted for export in June, after prices had corrected sharply.
Prices have declined to about Rs31,000 per candy (356 kg) now from the peak of Rs62,500 per candy in March-end.
The restrictions on cotton yarn were removed from 1 April, after the manufacturers found themselves saddled with big inventories following the curbs on exports.
Besides the changing dynamics in the market, administering the restriction has proven to be “a big headache” for the commerce ministry, especially after the recent allocation of 10 lakh bales, as some exporters have taken the issue to different courts, sources told the news agency.
They said it was in this context that Sharma reviewed the situation with the three secretaries on the weekend.
According to the estimates of the Cotton Advisory Board (CAB), the cotton surplus at the end of the current season would be 52.5 lakh bales on account of lower industry demand. In February, the CAB had estimated it at 27.5 lakh bales.
Likewise, the projection for domestic consumption of cotton this season has been lowered to 236 lakh bales, as against the earlier estimate of 265 lakh bales, on account of high inventories.
The cotton production projection, however, has been increased to 325 lakh bales for the current season.
Commenting on the decision, Confederation of Indian Textile Industry (CITI) secretary general D. K. Nair said: “It would have been better if the government could have allowed controlled exports...because cotton consumption in the country is low...nobody knows what will be the market condition in the coming months”.
Further, the government has also increased the limit of import of marbles.
The new policy envisages increasing the limit on quantity to be imported from 3 lakh tonnes to 5 lakh tonnes.
“Eligibility criteria have also been tweaked so more people become eligible for licence,” Khullar said.
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First Published: Sun, Jul 31 2011. 03 13 PM IST
More Topics: Cotton | Exports | OGL | DGFT | Trade |