Petition filed in court to restrain cotton & yarn exports

07 Jan '10

2 min read

On a petition filed by Reliance Textile Industries and Public Issues & Economic Forum, challenging the government's decision to allow export of more cotton bales and cotton yarn, the Sindh High Court, yesterday issued notices to the Ministry of Commerce and Ministry of Textiles, Trade Development Authority and State Bank of Pakistan.

Their counsel stated that in December 2009, new export orders amounting to a very huge volume of raw cotton and cotton yarn were initiated at a time when the cotton spinning sector and the value-added sector was facing acute shortage of raw cotton and yarn, respectively.

The government's policy of allowing unprecedented exports of both the commodities brought the spinning and value-added industries to a verge of collapse. He submitted that cotton crop yield for season 2009-2010 was estimated at 12.10 million bales against the domestic projected consumption of 14.681 million bales, which meant a deficiency of 2.581 million bales.

Despite being aware of this situation, the government had allowed unprecedented exports of raw cotton. Providing statistical data, he said that, in the year 2008-09 cotton sales to exporters stood at 214,631 bales and in the period August to November in current fiscal year 2009-2010, 693,243 bales were exported.

With regards to cotton yarn exports, the counsel said that for this commodity too, the last three months had witnessed a huge volume of exports which had created shortage of cotton yarn in the country and in turn had fuelled prices of cotton yarn in the country by 15-20 percent, which had upset all the calculations of the value-added exporting sectors like ready-made garments and home-textiles.

The counsel of the petitioners contended that, export of 1 kg of raw cotton is sold at US $1 in the international market, whereas 1 kg of value-added goods brings in $8, which meant that, by exporting value-added products the country could derive 700 percent more in precious foreign exchange.

He pleaded with the court to declare the government decision's to export raw cotton and yarn as unjustifiable and adverse to the national economy and restrain the government from allowing more exports of both the commodities.

Fibre2fashion News Desk - India

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