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The government might on Thursday discuss a proposal to impose 10 per cent tax on cotton exports above the declared surplus, to streamline exports and ensure a stable price regime.
Officials said the proposal, floated by the textiles ministry, had recommended imposing the duty on the freight on board value or a maximum of Rs 10,000 a tonne, whichever is less, for all cotton exports over the declared exportable surplus. Other proposals included declaring exportable surplus in September every year, based on the estimates of the Cotton Advisory Board.
The ministry was also for registration of cotton export contracts with the directorate general of foreign trade, to monitor the exports. The ministry wanted an inter-ministerial group to review the cotton position and make recommendations to vary or suspend the duty. However, the agriculture department was against the proposal. “The department of agriculture is clear that any sort of curb on export of farm commodity hurts the interest of growers,” a top official said.
India’s cotton production in 2013-14 crop marketing year that starts from October was expected to be 40 million bales (1 bale=170 kg), almost 4 million bales more than last year. This, trade sources said, could leave 10-12 million bales of surplus of which almost 10 million could be easily exported.
Agriculture Minister Sharad Pawar too had written a letter to Prime Minister Manmohan Singh few weeks back urging him to maintain a stable export policy for agriculture products in the interest of farmers.
India’s cotton production in 2013-14 crop marketing year that starts from October is expected to be around 40 million bales (1 bale=170 kilograms), almost 4 million bales more than last year because of benign weather during the sowing stage.
This, trade sources said will leave almost 10-12 million bales of surplus cotton of which almost 10 million could be easily exported.
‘I don’t see the justification in bringing such a distribution policy as any move to scuttle exports will only harm the farmers,” an official from a leading international trading firm said.
He said India’s cotton will find it difficult to find market in 2013-14 crop year as China is expected to offload a huge almost 10 million bales of cotton next year in the international markets which will pull down prices.
“In such a situation if the government wants to impose further curbs on exports, it will out price Indian cotton,” a trader said.
Recently, textiles minister Kavuri Sambasiva Rao advocated for the need to create a cotton stabilisation fund. He had said that fund would be used for the benefit of importers only and charged from surplus export.
Cotton has been sown in around 11.31 million hectares, down just 0.26 per cent from the same period last year till last week in 2013-14, according to data by the agriculture department.
| Year | Cotton Production* | Cotton Export* |
| 2008-09 | 29 | 3.5 |
| 2009-10 | 30.5 | 8.3 |
| 2010-11 | 33.9 | 7.65 |
| 2011-12 | 35.3 | 12.88 |
| 2012-13 | 33.4 | 8.1 |
| 2013-14** | 40 | --- |
| *In million bales. I bale=170 kilograms | ||
| **Estimated | ||
| Source: Cotton Corporation of India (CCI) | ||
