Govt may raise cotton export cap if output exceeds estimates

Commerce ministry says exports beyond 5.5 million bales will attract duty.

The textiles ministry favoured of cotton exports beyond the present cap of 5.5 million bales this year if production exceeds the estimate of 32.5 million bales.

“The textiles ministry would be the first to support the movement (of cotton) out of the country in the form of exports (if production exceeds 32.5 million bales),” Secretary in the textiles ministry Rita Menon, said when asked if the government would allow cotton exports beyond the current ceiling of 5.5 million bales in the cotton season. Cotton season starts in October.

She was talking to reporters after the inauguration of a handloom and handicrafts fair at Dilli Haat. Menon, however said, requirement of the domestic textiles industry should be kept in mind before permitting exports beyond 5.5 million bales.

The domestic textiles industry is likely to consume 22 million bales this year.

Earlier, the government had announced that duty-free exports of 5.5 million bales (of 170 kg) would be allowed in the current cotton marketing season. The Commerce Ministry had said that exports beyond 5.5 million bales would attract duty. To curb exports in wake of rising domestic prices of cotton, a duty of Rs 2,500 a tonne was imposed.

When asked if the government would impose any curbs on exports beyond 5.5 million bales, Menon said “the instruments that we will use after 5.5 million bales (of exports) will be considered by the government after a review meeting later this month.”

The Textiles Commissioner has started registration of cotton export contracts from October 1 and the actual shipments would start from November 1.

The registration of contracts would stop automatically the moment the ceiling of 5.5 million bales is reached.

Currently, the cotton prices in the domestic market are ruling over 65 per cent higher than Rs 22,400 (per candy) in the same period last year.

Further Menon said that a Yarn Advisory Board has been recently set up by the Textiles Ministry to take a stock of the yarn availability in the domestic market. “The board has seen that there is a gap between the production and requirement by the mills. I feel when it (board) will be strengthened, the gap between the yarn required and exported will be reduced,” she said.

Asked if the cotton prices would crash in the coming days, the Secretary said, “I believe that there will never be a situation where the cotton prices will crash, as there is enhanced capacity creation which is taking place in the industry.”

Govt registers export deals for 405,605 bales
NewsWire18 adds: The Textile Commissioner has registered export of 405,605 bales (1 bale = 170 kg) of cotton since October 1 as against applications for overseas sales of 2.53 million bales.

A Group of Ministers had last month decided to permit export of 5.5 million bales of cotton in 2010-11 (October-September) after registration of cotton export contracts with the Textile Commissioner.

Agriculture Minister Sharad Pawar last week said the ministers’ panel has decided to permit registration of cotton export contracts with the Textile Commissioner from October 1, but actual export shipments would be allowed only from November 1.

Registration of export contracts with the Textile Commissioner is mandatory for selling the commodity overseas.

The government had put cotton under the restricted list of exports in 2009-10, as exports had hit a record 8.3 million bales, resulting in sharp rise in domestic prices.

It has since relaxed export curbs as the country’s cotton production in the current crop year that started July 1 is estimated at a record 33.5 million bales.