The government has decided to restrict cotton yarn exports again. It has set a limit of 845 million kg for the financial year 2011-12, up from the cap of 720 million kg in the last financial year.
Till now, since March 31, cotton yarn exports were free given some riders for registration of cotton yarn export.
This decision has been taken by a joint committee of ministry of textiles, finance and commerce. To this effect a notification will be issued shortly.
Similar cap is also being contemplated for cotton exports but officials said it is too premature to decide about cotton since crop estimates are yet to come. However, they explained that most mills are running carryover stock of cotton to make yarn this year and exports are going on. Therefore a cap is decided so that there should not be a shortage of yarn in the domestic market till the new crop arrives and to tackle any eventuality.
At the same time to ensure genuine export of cotton yarn, the Directorate General of Foreign Trade (DGFT) has also come out with penal measures for breach of rules on registration of contracts for the new financial year. According to these norms, export shall be completed within 30 days from the date of issuance of registration certificate. An exporter failing to do so will be barred from further registration. In addition, a penalty could be imposed upon the exporter, ranging from a Rs 10,000 up to a maximum of five times the value of goods, whichever is more.
Similar norms have been stipulated for export of Assam Comilla cotton which is not a very popular export variety. Sources said as and when cotton exports are allowed for the new financial year, similar strict modalities may be stipulated for cotton export registration as well.
The acreage under cotton crop next season, starting August 2011, is expected to increase 7-10 per cent, following high prices and expectations of higher minimum support price (MSP) from the government.
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The acreage may go up from 11.1 million hectares at present (this season) to a high of 12 million hectares. “In fact, acreage under cotton reached a record level in 2009-10 following good prices,” said officials.
They explained the increased acreage is happening at the cost of other crops like paddy in the north, soybean, maize and groundnut in the west and tobacco and chilli in the south. “Land is limited and thus farmers are opting for cotton going by high prices both globally and in the domestic market,” official sources said.
Meanwhile, the production estimates are likely to hover around 31.2 million bales. In April 2011, the Cotton Advisory Board had revised the crop estimates downwards for the current crop season (2010-11) to 31.2 million bales, as against the earlier estimate of 32.9 million bales.
At the same time, the cotton acreage was reviewed upwards for the current season from 10.3 million hectares to 11.16 million hectares.
The output estimate was revised downwards due to unseasonal rain in December 2010, followed by extreme cold wave in the Saurastra region of Gujarat, Vidarbha, Marathwada and Khandesh in Maharashtra and Adilabad and in the Warangal region of Andhra Pradesh.