Govt eases cotton export rules

Cotton export procedures have been liberalised, in the backdrop of market prices barely ruling above the government support price, at a time when new crop arrivals have begun.

A notification by the directorate general of foreign trade (DGFT) says the cap for obtaining a registration certificate (RC) has been increased to 30,000 bales (a bale is 170 kg), from the present 10,000 bales, unless the quantity exported was less than this in the previous season. In the latter case, the RC would be given for the previous amount, if it was more than 3,000 bales; those who’d exported less and newcomers would get an RC for up to 3,000.

DGFT has been allowed to issue multiple RCs within this eligibility, subject to some riders. Also, applications are now possible from three more centres — Ludhiana, Rajkot and Visakhapatnam.

Alok Sekhsaria of P D Sekhsaria Trading Co, Mumbai, says the decision would make operations easier. However, the price of cotton in the international markets is about the same as the domestic market, so the impact would not be substantial, for now. Dilipbhai Patel, president of the All Gujarat Cotton Ginners Association, said the price of the Shanker-6 benchmark variety was close to Rs 33,400 a candy (356 kg), which does not make export viable. However, if the price falls with the arrivals picking up, it might benefit more exporters.

Bhagwan Das Bansal, president of the Punjab Cotton Ginners Association, said the price of J-34, the variety grown in the region and Rajasthan, was Rs 33,210 a candy. Traders are projecting a fall of about Rs 500 a candy after the entire crop arrives in the market. The current decision of the government will then bear fruit, he said.