Now, quota allotment a worry for cotton exporters

Even as the central government has allowed an additional one million bales of cotton exports in the current season, exporters and farmers’ bodies have raised concern over the quota allotment process to be taken up by the Directorate General of Foreign Trade (DGFT).

“There was a fiasco in quota allotment last time. We hope that this time the process is more just and transparent. The genuine cotton exporters should not be left out, with opportunists reaping heavy benefits by adopting unfair practices like selling the quota in the grey market,” said a leading exporter here.

The government had first allowed 5.5 million bales (170 kg each) of cotton exports, while on Wednesday, the ministry of commerce allowed an additional one million bales of export, taking the total to 6.5 million bales in the current year. DGFT is expected to issue a notification by tomorrow.

During the earlier quota allotment process, there were several instances of non-serious cotton exporters cornering a large amount of export quota, while many genuine exporters failed to meet their requirements. In some cases the quota allotted to non-serious players was sold at a premium in the grey market.

“Such practices are harmful for the industry as a whole. The government should make the process transparent,” said a trader from Ahmedabad.

In Gujarat, cotton farmers’ bodies are demanding an exclusive export quota. “Cotton farmers are the main stakeholders in the entire value-chain. The government should make a judicious plan for quota allotment and prioritise farmers’ bodies in it. For this, we have demanded to allot an exclusive quota of 200,000 bales to the farmers’ cooperatives like Nafed, Gujcot and CCI,” said N M Sharma, managing director, Gujarat State Cooperative Cotton Federation (Gujcot).

In a letter written to Ahmed Patel, political adviser to UPA chairperson Sonia Gandhi, Gujcot has demanded ‘at least 200,000 bales cotton export quota be given in favour of Nafed, CCI and Gujcot, specifically for Gujarat short staple cotton V-797/G-Cot-21 variety.

The industry believes nearly 60 per cent or about 500,000-600,000 bales are expected to be exported from Gujarat alone. Prices in the international markets are ruling in the range of 150-154 cents per pound. In March this year, prices had shot up to about 200 cents ($2) per pound.

“Even if the international prices have fallen in recent months, still there are some gains by selling in the overseas markets. Against the domestic prices, the international markets show premium of about Rs 4,000- 6,000 per bale,” informed a trader.