Giving some relief to cotton exporters, the government today said they will no longer have to furnish bank guarantees for registration of export contract.
"Export of cotton will continue to be free, subject to registration of contracts with the DGFT. [However], performance guarantee will no longer be required," a Directorate General of Foreign Trade (DGFT) notification said.
The relaxation will be available to exporters from October 1.
Earlier, an exporter had to submit a performance guarantee in the form of a 'Bank Guarantee' for 2.5% of the value of cotton to be exported, or for Rs 1 lakh, whichever was more.
To export cotton, a trader has to register the contract with the DGFT and execute the shipment within 30 days.
The government had earlier put restrictions on exports of cotton following significant increase in prices of the natural fibre in the domestic market.
However, the move had come in for a criticism from the Agriculture Ministry as also several chief ministers, including Narendra Modi from Gujarat.
Finally, the government removed the export restrictions last month and put cotton on the Open General Licence (OGL).
Against the estimated domestic consumption of 26.4 million bales, the production is pegged at 35.5 million bales next season, against 32.5 million bales in the current season, leaving room for exports, according to the Cotton Advisory Board (CAB).
