In less than two years, Government of India has imposed a ban on cotton exports on 5 March, 2012. And within one week, the ban was lifted to the utter dismay of the Indian textile industry. What does this show? An apparent lack of home work being done by the Government of India, which includes the ministries of Commerce, Textiles and Agriculture, each of which made its own contribution to the utterly confused and weak Cotton Export Policy.


Genesis


I think it is worthwhile to really go back to what could be the genesis of this problem; look into the reasons of imposing of ban and its ramifications and then analyze the reasons for a flip flop policy of first imposing ban and hastily retreating from it.


Till February, 2008, cotton textiles were governed by the Essential Commodities Act. Everything seemed to be going well. Consequent to the removal of cotton textiles from the Essential Commodities Act, February 2008, the multinational traders of cotton entered into Indian cotton market and started dominating the trade. With cheaper funds available abundantly, these traders are able to hoard cotton, export sizable volume threatening the fibre security of the country. Mostly the cotton stock-to-use ratio dipped below 20% as against the international average of 40%.


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