DGFT caps cotton yarn exports to 720 million kg

The central government has reinforced that the cap on cotton yarn exports, which was fixed at 720 million kg in December last year, must continue to stay, subject to exporters obtaining licence for the same. This move will open window for yarn manufacturers, facing a glut-like situation, to export 50 million kg cotton yarns till the month-end.

Industry players are, however, sceptical to complete shipments till March 31, as logistics may not support. Industry sources said the new notification follows the Bombay High Court’s (HC’s) March 9 order, which quashed an earlier policy circular and press statement of the Directorate General of Foreign Trade (DGFT), saying mere publication of a press note or an office memorandum did not meet the requirement of the Foreign Trade and Development Regulation Act.

Now, new notification will enable clearing of all pending requests for issuance of licence to yarn exporters. The court, while upholding the right of the government to arrive at a policy decision to limit exports at 720 million kg, said proper procedures were not followed in enforcing the order. “The export of cotton yarn was allowed under license. Issue of export license for cotton yarn will be subject to a limit of 720 million kg during financial year 2010-11 (up to March 31),” DGFT said in a notification issued late yesterday. So far, 670 million kg yarn exports have been permitted. Now, a licence for balance 50 million kg can be issued.

Cotton yarn manufacturers were restricted for export since December 1, the last date to seek the exports authorisation registration certificate from office of textile commissioner and ship the stock latest by January 15.

D K Nair, secretary general, Confederation of Indian Textiles Industry, said DGFT had allocated the quota on a pro-rata basis, as was decided earlier. He said DGFT issued public notice within a day of the HC ruling, wasting no time, but added the time left for shipment is not much.

“The government has released 50 million kg of cotton yarn for exports, but if the entire quantity can be exported by March 31 is to be seen. Indian spinning mills have a stock of 350-400 million kg due to high production, low domestic consumption and export freeze. But it is certainly a breather for the industry.”

Ashish Bagrodia, president, Northern India Textile Millers Association, said the industry was relieved by the DGFT notice, but was anxious as the time left for exports was short. He said roughly 40 million kg of cotton yarn could be exported by March 31. Exporters have to apply to DGFT for a license by March 18 for the quantity allocated to them and ship by March 31.