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Ginners want ban on cotton exports lifted
28 Jun '11
3 min read
The Core Committee of the All India Cotton Ginners' Association is likely to meet at Ahmedabad on June 29 to work out modalities for asking the Union Government to bring cotton export under the open general license (OGL) category.
According to the ginners, the ban on cotton export has led to the decline in prices of cotton in domestic markets due to supply being more than demand. In comparison to the surplus stock of around 9 million bales (1 bale = 170 kg), the Union Government initially permitted export of 5.5 million bales during the current cotton season starting October 2010.
This month, the Government has allowed export of an additional 1 million bales of cotton. Still, the country has a leftover stock of 2.5 million bales. This could lead the prices of 'white gold' further down driving many merchants to bankruptcy.
The All India Cotton Ginners' Association is urging the Centre to allow export of at least 2 million additional bales of cotton, prior to the beginning of the next season in October 2011.
Allowing ginners to export the cotton would be beneficial on two counts. First, it would help ginners to come out of the current financial crunch. Second, it would bring foreign exchange for the country, the Association said.
The Association at its meeting is also likely to deliberate on whether to put forward a demand to bring cotton under the open general licence (OGL) category. Such a step would help ginners to export directly to overseas buyers.
At the meeting, the members of the Association may decide to seek intervention of the Prime Minister on the matter, and may also approach other important Cabinet Ministers including the Minister for Agriculture and the Minister for Commerce.
Also on the agenda of the meeting is the appointment of the Governing body of the Association. It is likely to be appointed by the members hailing from the twelve States which produce cotton.
According to industry analysts, even the Cotton Corporation of India (CCI) is holding cotton stocks and has currently applied for export quota. This reduces the actual amount of the additional one billion quota available to other cotton exporters in the country.
Further, the piling stocks of cotton tend to erode the bank credibility of the ginners as they fail to timely repay their debts. However, the worst affected will be those cotton farmers, who have sown cotton on large area expecting to reap good remunerative prices like last year.
According to the ginners, the ban on cotton export has led to the decline in prices of cotton in domestic markets due to supply being more than demand. In comparison to the surplus stock of around 9 million bales (1 bale = 170 kg), the Union Government initially permitted export of 5.5 million bales during the current cotton season starting October 2010.
This month, the Government has allowed export of an additional 1 million bales of cotton. Still, the country has a leftover stock of 2.5 million bales. This could lead the prices of 'white gold' further down driving many merchants to bankruptcy.
The All India Cotton Ginners' Association is urging the Centre to allow export of at least 2 million additional bales of cotton, prior to the beginning of the next season in October 2011.
Allowing ginners to export the cotton would be beneficial on two counts. First, it would help ginners to come out of the current financial crunch. Second, it would bring foreign exchange for the country, the Association said.
The Association at its meeting is also likely to deliberate on whether to put forward a demand to bring cotton under the open general licence (OGL) category. Such a step would help ginners to export directly to overseas buyers.
At the meeting, the members of the Association may decide to seek intervention of the Prime Minister on the matter, and may also approach other important Cabinet Ministers including the Minister for Agriculture and the Minister for Commerce.
Also on the agenda of the meeting is the appointment of the Governing body of the Association. It is likely to be appointed by the members hailing from the twelve States which produce cotton.
According to industry analysts, even the Cotton Corporation of India (CCI) is holding cotton stocks and has currently applied for export quota. This reduces the actual amount of the additional one billion quota available to other cotton exporters in the country.
Further, the piling stocks of cotton tend to erode the bank credibility of the ginners as they fail to timely repay their debts. However, the worst affected will be those cotton farmers, who have sown cotton on large area expecting to reap good remunerative prices like last year.
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