Centre mulls subsidies to boost cotton exports

Faced with the prospect of a bumper cotton crop this year, the government is considering providing export incentives in the form of subsidies to double cotton exports.

Senior government officials told Business Standard that the textiles and the agriculture ministries had "in-principle" agreed to introduce a new export subsidy scheme for cotton. The proposal is expected to be formulated on the lines of similar export subsidy schemes run by the commerce ministry.

The proposal is likely to be taken up by the Cabinet soon.

Officials said as per the current estimates, cotton production this year was expected to be around 21.3 million bales as against 17 million bales last year.

India usually exports between 600,000-700,000 bales while importing a similar amount. Officials said the aim of the incentive scheme would be to push up cotton exports to around 2-3 million bales this year.

The subsidy for the scheme would be provided out of the annual budget of the textiles and the agriculture ministry.

In addition to the proposed subsidy, the textiles ministry has also formally mooted a proposal to export cotton to Pakistan through the land route.

"The ministry is in favour of allowing exports of cotton to Pakistan, but the proposal has to be cleared by the external affairs ministry," a textile ministry official said.