Either ban or cap on raw cotton exports: FIEO

Apex trade body the Federation of Indian Export Organisations (FIEO) has asked both Commerce and Textile Ministries to either ban or cap raw cotton exports at 4 lakh bales per month to check the price rise in domestic markets.

In last two months, cotton yarn prices have surged by about 20 per cent from Rs 13 per kg to Rs 16 per kg, which has forced many garment exporters to cut production, FIEO said in a statement today.

"We have approached Commerce and Textiles Ministry calling for immediate ban on exports of raw cotton or putting a ceiling of 4 lakh bales per month with an annual ceiling of 50 lakh bales a year for exports to ensure adequate domestic supply at reasonable prices," FIEO President A Sakthivel said.

Since Indian exporters would not be able to absorb the costs nor pass on the same to buyers, they may default in executing exports orders already obtained, Federation of Indian Export Organisations said.

At present, there is no ceiling on raw cotton exports.

Exporters fear that high prices of fabrics would prompt foreign buyers to shift their procurement base out of India to Bangladesh, Sri Lanka, China, Vietnam and Turkey.

This, the trade body said may lead to massive job losses as exporters would have to cut down production.

Last month, Apparel Exports Promotion Council, had also said that there could be massive job losses by January 2010 on unprecedented scale due to high fabric prices.