The government may not withdraw the cotton export ban immediately, said senior officials close to the development, but may wait until domestic demand is met.
“Currently, cotton stocks are arriving in the market and mills are buying. Once the demand is met to a large extent, exports will be allowed, say after two to three months,” said an official.
Official sources close to the development said, the decision has been taken on recommendations of the textile ministry and with the consultation of the ministry of agriculture.
“According to the textile ministry, Indian cotton exporters have already exported 9.4 million bales of cotton while exportable surplus, as projected by the Cotton Advisory Board (CAB), is 8.4 million bales, which is low. The export quantity will surpass an all-time high if the amount for which export registration has been taken is included,” said an official.
CAB is an inter-ministerial administrative body that keeps tabs on cotton demand and supply in the country.
In a related development, the Cotton Corporation of India has started direct procurement in Andhra Pradesh and issued instructions to officials to do it in Maharashtra if the prices of average quality cotton slipped below the minimum support price.
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The textiles policy cleared by the GoM in 2010 had said that a carry-forward balance of five million bales be maintained and only surplus cotton be exported, according to a textile ministry statement.
Exports at 9.4 million bales have brought down the carry-over stocks to 3.6 million bales. Textile ministry has projected that with only 25 per cent of cotton likely to arrive in the market during the current season, the scenario pointed to a shortage of cotton for the indigenous industry, huge rise in domestic prices of cotton and inability of textile mills to build carryover stocks for the 2012-13 cotton years.
The government banned cotton exports on March 5.