Envisaging no clearance of the heldover stock due to sluggish demand in the domestic spinning industry, the All India Cotton Ginners Association is going to have a meeting of its core committee in Ahmedabad on 29 June.
The members have decided to approach the Prime Minister’s Office, Agriculture Minister and Commerce Minister by preparing a draft proposal for permission to export another 1.5 million cotton bales.
A senior member of the Association Bhagwan Bansal told Business Standard that ginners across India have a stock of about 3 million bales for which there are very few takers in the domestic industry.
The stock piling for a long time may erode their bank credibility as they have to repay their debts raised from the Cash Credit limits.
The President of All Gujarat Ginners Association Dilip Bhai Patel who hails from Kadi in Gujarat told that the permission of export quota of 1 million bales failed to push the sentiments as the traders and exporters have 70 per cent of the required stock for exports, so there is a net requirement of 300,000-400,000 bales of cotton for exporters. This is spread over two months so there is no boom in demand.
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Vinod Ahuja of VRA Cotton Mills told that the applications for export quota have been filed to DGFT (Director General of Foreign Trade) and the quota allocation after final scrutiny would be declared on July 6. He added that the exporter cannot make a commitment to the buyer until final quota is alloted. But the total quantity for export (1 million) is too little to appease many players.
He added that if there is no restriction on import of cotton then the export should also be put under Open General Licence (OGL).
Even the Cotton Corporation of India (CCI) is having a tight rope walk this year and has applied for export quota with the DGFT. Sources in the CCI told that last year there was no export surplus as the CCI stocks were liquidated in the domestic market. This year, driven by the stagnant demand CCI has also joined the fray for exports.
“The organised players can only fight for the amendment in policy framework. The huge unsold stocks will add to miseries of all and sundry in the cotton industry. The biggest losers would be the cotton farmers who have sown larger tracts of land in anticipation remunerative prices those prevailed last year,” said an expert.