Cotton prices have shot up by 42 per cent since January resulting in a high raw material cost for yarn mills.
While the government scrapped cotton import duty on July 8, yielding to the mills demand, prices have not corrected.
A demand has also been made to ban exports, but the Agriculture Ministry is opposed to the ban, which is believed to have the support of the Textile Ministry.
"The contracts for export of cotton will be registered with the Textile Commissioner prior to shipment. Clearance of cotton consignments by Customs should be after verifying that the contracts have been registered," a DGFT notification said.
The Confederation of Indian Textile Industry (CITI), which spearheaded the July 9 strike by yarn mills is happy at the move for compulsory registration of cotton export contracts.
"The association had requested the government for the same. This will help government to keep a watch on the quantity of exports," CITI Secretary General D K Nair said.
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"It would act as an enabling procedure for government to take informed policy interventions, if required," Nair said.
However, exporters resent the move on the ground that it amounts to creating barriers.