Amid inter-ministerial differences over raising ceiling for cotton exports, the final call on the issue will be taken by ministers of agriculture, textiles and commerce soon.
The Commerce Ministry has already circulated a paper in this regard, though the Textiles Ministry disfavours revisiting 5.5 million bales (170 kg each) cap on cotton exports for the current season (September-October), sources said.
After peaking at Rs 62,500 per candy (356 kg) in March-end in the domestic market, cotton prices have crashed to Rs 44,000 per candy in line with global trends. In the international market, prices have dropped from $2.46 per pound in March to $1.63 per pound now.
The government had put a quantitative restriction on cotton exports at 5.5 million bales for the 2010-11 season in the wake of a sharp rise in prices of natural fibre hitting the domestic textiles industry.
Even after correction in prices, the Textiles Ministry is not in favour of any hike in the export ceiling. Textiles Secretary Rita Menon had recently said the government would not revisit the current ceiling of cotton exports.
The Textiles Ministry's argument is that the production forecast for this season has been lowered to 31.2 million bales from 32.9 million bales, even if prices have come down. Menon had also said that the domestic textiles industry needs raw material security.
"The whole question of raw material security is engaging our attention," she had said. Meanwhile, Gujarat Chief Minister Narendra Modi has attacked the Centre that Union Commerce Ministry's policy of restriction on export of the natural fibre was sheer injustice to farmers.
He appealed to Prime Minister Manmohan Singh to allow export of one million bales of cotton from Gujarat. Also, Gujarat Agriculture Minister Dilip Sanghani today pointed out that fall in domestic cotton prices was due to the "anti-farmer" export policies of the Central government.
However, Confederation of Indian Textile Industry (CITI) Secretary General D K Nair said, "The government should not allow further exports this season as cotton prices have crashed and if the export ceiling is hiked, the entire value chain would get disturbed."
