After small traders got relief on latest quota opening, large ones plan to take DGFT to court.
The ongoing faceoff between cotton traders and the Directorate General of Foreign Trade (DGFT) over the additional million-bale (170,000 tonnes) export quota is getting into deeper legal complications.
After ginners and small traders got relief from the high court here last Wednesday, large traders are now planning to move court against DGFT’s decision to recall their certificates to lower the unit quantity of exports. DGFT has recalled all export registration certificates of over 1,000 tonnes for re-validation, affecting 200 traders. Many of them had already signed contract agreements with buyers abroad; a majority say they’d also shipped a substantial portion of the allocated quantity of 4,250 tonnes each.
“Revalidating means we need to negotiate with overseas buyers again for a lower quantity of shipment. In some cases, we need to cancel our contract notes, which may mean loss of business for ever,” said a large trader who received the DGFT notice.
DGFT had invited applications for export registrations from those trading firms that had shipped during the two previous financial years, 2008-09 and 2009-10. Those who’d only taken part in the current year’s original export quota of 5.5 million bales were barred from the additional quantity. This decision was later challenged by 82 small traders, mainly ginners, in various high courts (HCs) across the country.
While the orders of various HCs had earlier directed DGFT to consider ginners’ applications, the HC here had on July 20 ordered it to receive, consider and process all applications made prior to July 6, the final allocation date previously decided by DGFT.
DGFT had, in its original schedule, allocated 158,460 tonnes of cotton on a pro-rata basis to 227 valid applicants of the total of 581. According to the DGFT trade notice, 8,200 tonnes had been sequestered in obedience to interim orders of various HCs for the list of 82 writ petitioners and 3,339.2 tonnes sequestered in obedience to interim orders of the HC at Kolkata for two petitioners there.
Since, the HC here had ordered allocation of a minimum 100 tonnes to all valid applicants, the DGFT faced a crisis on quantity, resulting in the recall of all certificates of over 1,000 tonnes. The HC had ordered a higher ceiling of 1,000 tonnes for large exporters and, hence, cut the additional quantity from the previous DGFT’s ceiling of 4,250 tonnes to accommodate all applicants.
“The DGFT would have received more applications had it invited it without any restrictions,” said Chandulal Thakkar, a veteran cotton exporter.
Meanwhile, cotton prices have declined drastically since the government allowed additional exports on June 6. The price of the benchmark Shankar-6 variety is down 31 per cent to Rs 8,436 per quintal, while cotton futures for near-month delivery on the New York cotton exchange fell 35.3 per cent to trade at $2,153 a tonne.
