Textile industry has sought Prime Ministers' intervention for ensuring availability of cotton for domestic firms considering that exporters registered 55 lakh bales cotton for exports within 10 days of the government initiating the process.
The government has permitted export of 55 lakh bales of cotton (of 170 kg each) for the period ending December 15, 2010. Registration of export contracts was started on October 1 while the shipments are to begin from November 1.
However, the total contracts have already touched the ceiling of 55 lakh bales, spurring fears of cotton shortage in the country.
"This will lead to a cotton famine in the country and mills will be forced to close down or scale down production drastically," Confederation of Indian Textile industries (CITI) chairman Jaipuria said in a letter to Prime Minister.
Completion of export registration within 10 days means that exporters would need to acquire this quantity by November end and ship this out by December 15, 2010, the confederation said.
Even if last year's ending stock of 40.5 lakh bales as estimated by Cotton Advisory Board (CAB) is taken into account, there will be practically no cotton stock left if 55 lakh bales get exported during this time," Jaipuria said.
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"This scenario has pushed up cotton prices to over Rs 41,000 a candy, as against Rs 23,000 a candy that prevailed during this time last year," Citi said while urging the government to delay the cotton exports against the contracts already registered, up to January 1, 2011.
Each candy consists of 356 kg of cotton. Citi also demanded the withdrawal of export incentive of 1.5 per cent given by government on cotton exports.
Earlier, the government had announced that duty free exports of 55 lakh bales would be allowed in the current cotton marketing season.
The Commerce Ministry had said that exports beyond 55 lakh bales would attract duty. To curb exports in wake of rising domestic prices of cotton, a duty of Rs 2,500 per tonne was imposed.
As per conservative estimates, the cotton production in 2010-11 is likely to be 325 lakh bales. However, the Agriculture Ministry expects the yield to touch 335 lakh bales.