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GEA request Govt to suspend export of cotton yarn
Dec '10
Mr. Rakesh Vaid, President, Garments Exporters Association has expressed serious concern over the recent decision of the Government to allow registration of contracts for export of cotton by the Directorate General of Foreign Trade vide Notification No.12(RE-2010)/2009-14 dated 16th December, 2010 which has resulted in further hike in the prices of cotton yarn and fabric.

The Government had earlier decided to allow export of 55 lakh bales of cotton during the cotton season 2010-11 under the EARCs granted by Office of Textile Commissioner, Mumbai. However, according to the Notification No.12 dated 16.12.2010 henceforth registration of contracts for export of cotton will be done by DGFT.

Subsequently, it has been decided in the meeting of Group of Ministers (GoM) held on 21.12.2010 that 720 million kgs. of Cotton Yarn will be allowed for export during the year 2010-11 and DGFT has issued, Notification No.14(RE-2010)/2009-14 dt. 22.12.2010 stipulating that henceforth export of cotton yarn will be restricted and will be allowed to be exported under licence.

However, Exporters who have obtained Registration Certificate from Textile Commissioner, Mumbai before 1st December, 2010 would be permitted to export Cotton Yarn within the quantity limit for which such registration certificate has been issued and within the validity of such registered contract.

In a letter to Mr. Dayanidhi Marn, Union Textile Minister, Mr. Vaid has requested the Government to immediately suspend export of cotton and cotton yarn because of the recent extraordinary rise in cotton prices and consequent steep hike in prices of the yarn. Mr. Vaid further pointed out that besides price fluctuations, fabric availability has become a serious issue as weaving units are not making any delivery commitments making Apparel Exporters helpless in fulfilling their export obligations against orders already booked and also in quoting prices for future orders to their overseas buyers.

Although, the Government had earlier taken some positive and appreciable steps and capped raw cotton exports and cotton yarn exports, the prices of cotton yarn in the domestic market have not yet come down. It seems steps taken so far have not yielded the desired results as yarn prices inspite of the cap announced by the Government, are still going higher and higher resulting in financial hardships to exporting community.

Mr. Vaid has again requested the Government to take prompt necessary steps to safeguard the interests of Garment Exporters. The Government should not allow export of raw cotton and cotton yarn for at least three months to help the exporters to overcome the present crisis being faced by them because of unprecedented and abnormal steep hike in the prices of cotton yarn and fabric, added Mr. Vaid.

Mr. Vaid pointed out that garment exporters can neither pass on the increased input cost to the buyers nor can absorb themselves as are still facing difficulties because of worst ever worldwide recession and low unit value realization from the overseas market and it would take some more time for the world economy and the apparel trade to revive as the global economic outlook still remains difficult and the performance of garment export sector will be affected by continuing global slowdown and domestic inflationary pressures.

Garments Exporters Association

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