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Mr Arumugam welcomes cotton export ban

07
Mar '12
Confederation of Indian Textile Industry (CITI) has welcomed the decision announced by government to prohibit further exports of cotton. In a statement, Mr. S.V. Arumugam, Chairman, CITI stated that the Confederation had earlier reacted against such government intervention in the cotton market and suggested that market forces be allowed to play out.

However, it has now come to its notice that speculative registration of cotton export contracts in large quantities has been resorted to by some traders and permitting exports against such contracts would have seriously affected the fibre security of the textile value chain.

In this context, Mr. Arumugam pointed out that the industry has been requesting that information on registration of cotton export contracts be placed in the public domain as is being done in the case of cotton yarn. If such information was available to the industry, the efforts to disallow exports against suspicious bookings would have been supported by CITI from the beginning.

Mr. Arumugam clarified that CITI's initial reaction to the decision of the government stemmed from the ignorance of the magnitude of cotton export registration as well as the perspective formed based on some of the measures taken by government last year.

Mr. Arumugam stated that raw material base is the core strength of the industry and it is difficult to visualize that industry could remain competitive based on imports of cotton. A minimum of 2 ½ months consumption at the beginning of year has to be provided.

With exports of cotton crossing 9.4 million bales, and registration of contracts covering another 2 million bales or more, the expected carryover on 1stOctober 2012 would have fallen below the desirable level. This would be contrary to the decision taken by the Group of Ministers in 2010-11 and would inevitably affect textile production in the country. CITI Chairman observed that if the decision to ban cotton export had not been taken at this stage the export of cotton would have reduced the stocks to a dangerous level.

Mr. Arumugam stated that the textile industry and CITI would whole heartedly support the measures of government to ensure fibre security for the industry.

Confederation of Indian Textile Industry (CITI)


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