The Director General of Foreign Trade (DGFT) may go ahead with the cotton export quota allocation from the proposed date of July 6.
The issue assumes significance since eight or nine exporters all over India have been seeking a stay in the matter, taking objection to the new eligibility criteria set by DGFT for allocation of the quota this time.
Specifically, objection has been raised on the criteria of past performance, which was not there when the quota was allotted by the textiles ministry. The Andhra Pradesh high court, in response to one of the petitions, has asked DGFT to consider the application of the exporter. Informed sources said while DGFT may consider the application, there is no reason to postpone the process since the order does not specify either a stay in the allocation process, or an interim relief or change of parameter. The petitioner was of the view that by putting past performance as a criterion, DGFT is prohibiting eligible entities which could have exported this time due to surplus availability and falling domestic prices.
DGFT, in fixing conditions and modalities, has said those seeking to export should have exported during the 2008-9 and 2009-10 seasons (October-September). Allocation is to be made on a pro-rata basis, but an exporter will not get to export more than 25,000 bales (170 kg each). Applicants can seek to export a quantity that is higher than the previous year, subject to the 25,000-bales limit.
The government on June 9 notified exports of 1 million bales, in addition to the 5.5 million bales that got exhausted by January 15. The export quota was fixed based on projections that production this season could be a record 32.9 million bales. The Cotton Advisory Board had in February cut the estimate to 31.2 million bales, still a record. While the textiles ministry sees production still lower around 31 million bales, the agriculture ministry has projected 32.9 million bales.
While registration for the additional quota began on June 20 and ended on June 25, applications got processed till July 5 and allocation of quota will be announced tomorrow. Exporters will be given time to present their documents between July 7 and July 15, while shipments will have to be completed by September 15, according to the schedule.
Cotton is among the very few commodities facing stringent measures over and above the norms laid out in the general trade policy.Cotton exports were allowed after the fibre’s prices dropped about 35 per cent since the first week of April to Rs 40,000-41,000 for a candy (356 kg) of the Sankar-6 variety. Though prices increased by 10 per cent after the additional export quota was announced, they have dropped to the previous levels again, on lack of demand. Currently, prices are ruling at Rs 39,500-40,000 a candy.
