Even as restriction of cotton export is being removed, the ginning industry in Gujarat has been expressing its dissatisfaction over the move by Centre.
Terming the decision as late, the ginning industry in Gujarat says the removal of export restriction on cotton will not benefit its players at all.
"The recent decision to remove restriction on cotton exports will keep up the price of the commodity. As this decision is a bit late, it will not give any benefits to ginning industry as international cotton market is also down. The government should have removed the export cap three months back when export demand was so good. It would not only deprive the ginning industry in Gujarat from any benefits but also across the country," said Bharat Vala, president of Saurashtra Ginners Association (SGA).
India's decision to remove quantity restrictions on cotton exports comes at a time when both global and domestic prices have dropped nearly 50 per cent since March on declining demand from textile makers.
"It is not a timely decision by government as overall demand in international market as well as domestic market is dull. We are not so bullish on cotton price as yarn market is not so good. There will be no chance for any big domestic or export demand save for some marginal demand," said Dilip Patel, president, Gujarat Ginners Association. Cotton prices have declined to about Rs 29,000-30,000 per candy from the peak of Rs 62,500 per candy in March-end.
After government announcement of export, price of Gujarat Sankar-6 cotton has increased by Rs 2,000 per candy to Rs 32,000 from Rs 29,000-30,000 per candy of 356 kg in last two days.
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Ginners lobby believe that prices will not go beyond Rs 35,000-36,000 a candy in coming days or till the new season starts. "International as well as domestic prices of cotton run parallel. Cotton prices in global markets is about Rs 33,000-34,000 per candy while that in India it is Rs 33,000-33,500 a candy. Moreover international demand is weak and in this condition chance of export demand is very low," said Arvind Raichura of Balkrishna Ginning from Padadhari near Rajkot.
India mainly exports cotton to top importers like China and other Asian countries such as Bangladesh and Vietnam. In October last year, the government had capped cotton exports at 5.5 million bales (170 kg each) to protect the domestic textiles industry in the face of rising raw material prices.
An additional one million bales were permitted for export in June, after prices had corrected sharply.
According to the estimates of the Cotton Advisory Board (CAB), the cotton surplus at the end of the current season would be 5.25 million bales on account of lower industry demand. In February, the CAB had estimated it at 2.75 million bales.