India: The Indian Government may raise cotton export cap if output exceeds estimates

Commerce ministry says exports beyond 5.5 million bales will attract duty.

The textiles ministry devoured of cotton exports beyond the present cap of 5.5 million bales this year if production exceeds the estimate of 32.5 million bales. “The textiles ministry would be the first to support the movement (of cotton) out of the country in the form of exports (if production exceeds 32.5 million bales),” Secretary in the textiles ministry Rita Menon, said when asked if the government would allow cotton exports beyond the current ceiling of 5.5 million bales in the cotton season. Cotton season starts in October.

The domestic textiles industry is likely to consume 22 million bales this year.

Earlier, the government had announced that duty-free exports of 5.5 million bales (of 170 kg) would be allowed in the current cotton marketing season. The Commerce Ministry had said that exports beyond 5.5 million bales would attract duty. To curb exports in wake of rising domestic prices of cotton, a duty of Rs 2,500 a tonne was imposed.

When asked if the government would impose any curbs on exports beyond 5.5 million bales, Menon said “the instruments that we will use after 5.5 million bales (of exports) will be considered by the government after a review meeting later this month.”

The Textiles Commissioner has started registration of cotton export contracts from October 1 and the actual shipments would start from November 1.

The registration of contracts would stop automatically the moment the ceiling of 5.5 million bales is reached.

Currently, the cotton prices in the domestic market are ruling over 65 per cent higher than Rs 22,400 (per candy) in the same period last year.