Cotton export has been freed, under Open General Licence (OGL), for one more season starting October. And, with much relaxed criteria, unlike the previous season.
The Directorate General of Foreign Trade (DGFT) has done away with the eligibility criteria for exporters and the various other stringent conditions of the previous season. The OGL will be valid for the season starting next month to September 2012. The only condition that remains is the registration certificate for export and reporting details which specify a penal clause for failure to export after getting the certificate. The criterion demanding a performance bank guarantee has also been dropped.
Besides, for rice and wheat, the DGFT has specified no eligibility criteria, except that exports should be made from privately held stocks. India is the second biggest grower of wheat and allowed private companies to export the grain for the first time in four years. A panel of ministers permitted sales of two million tonnes of wheat and 2.1 mt of non-Basmati rice last week.
India banned private companies from shipping wheat in early 2007 and non-Basmati rice in April 2008, to bolster domestic supplies amid a global food crisis. Restrictions were eased, allowing some quantities of wheat, rice and wheat products to be shipped to Africa, as well as Bangladesh and Nepal through state-run companies under government-to-government deals. The panel on July 11 this year put off a decision to end the ban on wheat exports due to non-competitive prices globally, while approving a million tonnes of non-Basmati rice.
In the previous season, DGFT had said a cotton export quota would be granted only if an entity had exported in either of the previous two cotton years (2008-09 and 2009-10), and allocation would be done on pro-rata basis. The pre-conditions were challenged at the high court here, which had ordered DGFT to extend the allocation process to August 8. DGFT challenged the HC order in the Supreme Court; it is still pending.
In October last year, the Centre had set a ceiling for cotton exports at 5.5 million bales (170 kg each) to protect the domestic textile industry in the face of rising raw material prices. An additional million bales were permitted for export in June, after prices had corrected sharply.
