Centre May Allow Export Of Additional Cotton
The Centre is likely to allow exports of additional raw cotton over the 10.55 lakh bales (170 kg) it has permitted so far, due to depressed prices of cotton this year, according to industry sources here.
Being farmer-friendly, the United Front government is keen that the cotton prices should improve so that the growers benefit, the sources said. The prices of raw cotton are ruling 10 to 15 per cent lower than the prices during the same time last year.
The move to allow additional exports was significant since growers would be encouraged to continue cultivation of cotton, the sources said.
The move would also mean that the government would not deviate from its avowed policy of helping the growers.
Union textiles minister R L Jalappa was of the view that there should be no restrictions on exports of raw cotton, yarn and cloth.
The policy to allow additional quota would help buyers of raw cotton abroad, who had become conversant with the properties of Indian cotton during the last three years, they said. The move would also help reap benefits of the competitiveness of Indian cotton, which was 15 per cent cheaper that cotton available in other competing countries.
For example, while the Shanker-4 variety in India cost 72 cents, its equivalent US variety called California cost 90 cents. The J34 variety was cheaper by nearly 20 per cent in comparison to its equivalent in the US.
In view of the financial crunch, the buying pattern of raw cotton by spinning mills had changed this year which had led to suppressed price levels, the sources said.
Mills usually purchased raw cotton in bulk but owing to the credit squeeze, their purchase had been limited to an inventory basis, the sources said.
Denying reports that the already announced 10.55 lakh bales export quota had not been utilised, the sources said except for a small quantity being unused in the quality general ginners and suvin categories, the rest, including the cotton meant for private trade and for the modern ginning category, had been fully booked.
The sources said the estimate of cotton production during this crop year (1996-97) had been put at 155 lakh bales, 6 lakh bales less than last year's record production.
The carry-over stock was expected to decline to 15.02 lakh bales from 23.52 lakh bales, while the consumption by mills would go up from 135.5 lakh bales to 141 lakh bales.
Asked if the move to allow more exports would not be resisted by the mills, the sources said it was unlikely since they were expected to exhaust their cotton yarn export quota of 60 million kg for the first half of the year by this month and they would have to wait till July to utilise the other half-yearly export quota of 60 million kg.
They also discounted any shortage in crop, saying Indian crop production had stagnated between 150 and 160 lakh bales and barring natural calamities, it was unlikely to be affected.
However, there was a need to improve yield per hectare, particularly in Maharashtra, as the area under cotton cultivation had also become stagnant. On futures trading, the sources said though the Forward Markets Commission was yet to indicate when it would take off, it was expected to begin soon.
The industry too would not like to begin during mid-season and would prefer to start afresh from the next crop season, the sources said.