As the suspense over a ban on cotton exports continued for a third day, all the three government departments involved in the issue — commerce, textiles and agriculture — stuck hard to their positions.
This means Finance Minister Pranab Mukherjee, who will chair a group of ministers’ meeting on Friday to review the decision, has to once again bring various conflicting sides to an agreed position.
Meanwhile, Agriculture Minister Sharad Pawar is likely to skip the meeting. The minister told Business Standard, “I won’t be able to attend the March 9 meeting as I have prior engagements. However, I will send my views in writing, which the GoM will consider before taking a decision.”
He added he was of the view that the ban would impact the interest of farmers and therefore needs to be lifted immediately.
In a related development, Prime Minister Manmohan Singh assured a delegation of Congress leaders from Gujarat and Maharashtra — the country’s two biggest cotton-producing states — that the decision will be reviewed at the earliest by a GoM.
“The prime minister has directed that the group of ministers should meet on Friday to review the decision urgently,” a statement issued from the Prime Minister’s office said.
Before meeting the prime minister, the delegation from Gujarat also met UPA Chairperson Sonia Gandhi. “She was also of the view that the ban should be lifted,” the Congress unit of Gujarat said in a statement.
Officials said some middle ground is being worked out under which the registered exports — of 2.5-3 million bales (1 bale=170 kg) — would be allowed to be shipped, likely in a staggered manner, while no fresh registration for export for the time being.
The textiles ministry today continued to defend the decision to ban the export on the grounds of protecting the domestic industry.
Commerce and Industry and Textiles Minister Anand Sharma told reporters in Vietnam today that the decision was judicious and he would personally explain the reasons for this to Pawar.
Pawar, along with Gujarat Chief Minister Narendra Modi, has been one of the most vocal critics of the sudden ban on exports.
Sharma said in Ho Chi Minh City: “We could not countenance a situation where the country, which is a major cotton producer, is forced to import at much higher prices to meet the domestic demand of the industry. That is why it was a judicious and considered view taken.”
On informing Pawar about the ban, he said: “I had left a note on Saturday night for Pawar, since I was not successful in speaking to him over the phone. We are one government; we all are ministers in the same government.”
According to Sharma, the finance minister has been fully apprised of these developments.
Sharma’s attempts to arrive at a consensus might not find much favour with Pawar.
Meanwhile, the chairman of Commission for Agriculture Costs and Prices (CACP), Ashok Gulati, told Business Standard, “The cotton farmers of Maharashtra are already reeling under the impact of falling prices, which has dropped by 30-40 per cent since last year. On top of that, this sudden and uncalled ban on exports is rubbing salt to their injury.”
Gulati had recently done a full-fledged study on the miserable condition of cotton farmers of Maharashtra this year because of sharp drop in open market prices.
Multinational trading houses, who have been blamed indirectly by the commerce and textiles ministries for hoarding Indian cotton abroad by trading between sister-companies, clarified their positions, saying the process was well within Indian laws and rules.
“Trading between sister-companies is a common trade practice in commodities markets. There are strict transfer pricing norms in India which guide trade between related and sister counterparts and is allowed under the Indian Foreign Trade and Income Tax laws,” said a senior official of a multinational trading company involved in exporting cotton from India.
The textiles ministry on Tuesday said registration of cotton for exports had shot up unusually between mid-February and March, giving rise to speculation that multinational trading houses based out of India were shipping Indian cotton abroad to their sister concerns for hoarding.