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Contracts prior to April 9 outside purview of cotton export ban
Apr '10
The impact of government's ban, on the overseas sales of raw cotton, so as to control the flare up in prices in the domestic market, is likely to be minimal, as export contracts worth over 7.9 million cotton bales are already registered. Also, in its notification, government cancelled registration of raw cotton export shipments, indefinitely, with effect from April 19, 2010.

During a press conference, Binod Nangalia, from the Chamber of the Textile Trade and Industry (COTTI) said that, the registered contracts with the textiles commissioner, for countries such as Bangladesh, China, Indonesia and Pakistan, prior to the ban on overseas sales of raw cotton i.e. till April 8, were outside the purview of the ban.

Although each year, raw cotton exports from India are about 8 million bales, last year, the exports reduced to about 4.2 million bales.

According to an industry expert, “Following the inter-ministerial meeting on the sharp increase in cotton prices, government has decided that, registration of export contracts prior to the delivery of raw cotton, will be suspended with effect from April 19, till further orders.”

Earlier, so as to keep a check on the prices of the commodity, government had levied a duty of Rs 2,500 per tonne, since April 9.

“However, within the last ten days, raw cotton prices have witnessed minor corrections in the local market. They have reduced from Rs 30,000 a candy to almost Rs 29,000 a candy”, said Nangalia. But the ideal cost per cotton candy, according to him, should not exceed the Rs 20,000 – 22,000 range.

During the period, September 2009 - October 2010, cotton production in India is likely to be about 30 million bales, as compared to 29 million bales, last year.

Although, globally, raw cotton production has dropped by five percent, in India its output has increased owing to 40 percent increase in the Minimum Support Price (MSP) of raw cotton in 2008-09.

Within the last six months, cotton prices in India have increased by almost 30 – 35 percent, due to increasing demand of raw cotton from India to international markets. Nangalia feels that, government's step has come in too late to provide the desired results.

Fibre2Fashion News Desk - India

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