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Industry's vox on cotton exports permit
06
Oct '10
Cotton – the cash crop of India is been in headlines for one reason or other since recent some months. Year 2010 has witnessed a series of happenings in terms of cotton and its export policy in the country be it MSP issue, ban on exports, or the permit on exports from country that has been announced last month end.

Decision makers suspended exports in April to cool domestic prices and bolster supplies, and then introduced a licensing system for shipments a month later. Cabinet Ministerial Committee(CMC) in India constituting Mr Pranob Mukherjee - the Finance Minister as chair person, Agriculture Minister, Commerce Minister and the Textile Minister on September 28th arrived at conclusion to allow cotton exports from India from November 1st, 2010. The registration for exports has begun from October 1st with no export duty for the allowable target of 5.5 million bales (170 Kg/bale). So, exporters can begin shipments from begin of November after securing permits from the textiles ministry as declared by Textile Secretary, Ms Rita Menon last week.

This decision has for sure raised inquisitions amongst the industry makers, whereon they are assessing on the pros and cons of this announcement by Govt. Fibre2fashion News team too joined their quest and recorded the reactions of real time dealers within the sector. Speaking exclusively with our NEWS team, the President of Cotton Association India (CAI) – an apex cotton body of India, Mr Dhiren Sheth said –“Originally, shipments were expected to be allowed from 1st of October, but they have been postponed by one month that is until November. So, the CMC's decision on exports still does not permit shipments in October but only the registrations. We are disappointed with that. However, still, we are consoled that at least finally there is some clarity on this issue, now. There are some buyers who may have bought cotton for October shipments. The sellers, who would have sold to these buyers, would have faced arbitration and claims. “

The president also envisages good demand for cotton. He believes India has to compete with US as it has also harvested a big crop this year. However, overall, this cotton year for India would be a promising one according to Mr Sheth.

Giving a glimpse of cotton market dynamics in near future, Mr Sodhani, Cotton head, Century Industries Ltd- one of the Asia's largest Composite 100% Cotton Textile Mill , described “Government has given permit to export around 6 million bales of cotton from 1st November 2010 onwards. The cotton crop in China is less and due to deluge the cotton crop of Pakistan was damaged greatly which also affected their cotton growth. From the present situation Pakistan at least require around 2 to 3 million bales of cotton.”

He also brought in to notice that as per Union Agriculture Minister Mr Sharad Pawar's statement, India will export 7.5 to 8 million bales because of high crops as against the permission given of around 6 million bales. Mr Sodhani believes that even if the Government applies more duty on this, the international prices are ruling high. Therefore he feels that export of cotton bales will touch around 8 million bales.

Concluding the talk, Mr Sodhani spoke- “Though the cotton prices are high, the yarn and fabric manufacturers are not likely to incur loss, however there will be heavy pressure on profit margins. “

Fibre2fashion News Desk - India

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