Ginners demand separate quota for cotton export

June 27, 2011 - India

On expectation of new demand following the Centre’s decision to allow export of additional one million bales of cotton on June 9, price of Shankar-6 variety of cotton shot from Rs. 41,000 per candy (1 candy = 356 kg) to Rs. 45,000 per candy. However, the price did not sustain for long and started declining within a week after the announcement.

This has led to demands for further relaxation in export quota, especially from the ginners. The ginners from Saurashtra region in Gujarat have demanded a further rise in export quota and have put a condition that a separate quota should be allocated to them.

Meanwhile, the Centre has completed the process of registering applications for extra exports of 1 million bales (1 bale = 170 kg). The task of scrutinising these applications is expected to be completed by July 5 and official announcement regarding the quotas would be made the next day. Those who obtain the permission to export the extra lot will have to get their shipments cleared by September 15.

The additional export of one million bales is over and above the export limit of 5.5 million bales set for the current season that commenced in October 2010. This limit had got exhausted by January 2010 itself owing to heavy demand from Pakistan, China, Bangladesh and Indonesia.

But, even after the allocation of fresh quota, there is no rise in demand for cotton as the exporters would like to first exhaust the stocks that they had bought earlier. Moreover, there is no demand even from the side of textile producing units as they too have enough stocks of yarn. Hence, in view of sluggish demand, ginners are pitching for more export of cotton.

Last month, the ginners from Saurashtra had gone on strike asking the Centre to allow additional exports of 2.5 million bales of cotton.

Owing to deficient demand, ginners in the country have a leftover stock of five million bales. This could cause problem, especially for farmers as fresh crops start arriving in October.

The ginners claim that if a special quota is sanctioned for them, they can ensure higher prices for cultivators as the demand would intensify.

The decision of the spinning mills to exercise a 30 percent cut in production has also led to a decrease in domestic demand for cotton. Besides their mounting stocks, the spinning mills are also vexed by the Centre not extending duty drawback facilities for exports.

The affliction of Tirupur-based manufacturing units has also hit the garment industry hard. The textile-dyeing units in Tirupur were shut down following a ruling by the Madras High Court to that effect on a petition alleging the units to be polluting water of River Noyyal.

In the meantime, the Punjab Government has also joined forces with the groups demanding additional export quota for cotton.