The government on Saturday said it might review the cotton export quota in mid-November. The announcement came three days after it permitted duty-free cotton exports of up to 5.5 million bales (one bale is 170 kg) from October.
According to the Ministry of Commerce and Industry, production in the 2010-2011 season is estimated at 32.5 million bales, based on which the government, including the Cotton Advisory Board (CAB), decided to put a ceiling of 5.5 million bales on exports.
However, the agriculture ministry estimated production at close to 35 million bales due to increased acreage. During the 2009-2010 cotton season, total exports were 7.5 million bales, while production was 29.5 million bales. India is the second-biggest producer of cotton.
“There will be a review meeting on November 15 for three reasons. First, we will take a stock of exports that will be made between October 1 and November 15. Second, depending on the supply at that time, we will revise the numbers either upwards or downwards. At this juncture, it will not be possible to assess how much exportable surplus will be available,” Commerce Secretary Rahul Khullar said on Saturday.
The review meeting will also look into the current trends as well as the price situation. At present, cotton exports attract a duty of Rs 2,500 a tonne. The quantum of prohibitive duty will be decided by the departments of revenue and commerce.
“The moment exporters go beyond the ceiling (of 5.5 million bales), a prohibitive export duty will kick in. Removing the duty means we will be gradually shifting to a regime where exports of cotton are tax-free, open and need no licensing. The only requirement will be registration,” he said.
The textiles commissioner will start the mandatory registration of export contracts from September 15. An online registration system is being planned to make the process transparent.
“The purpose behind the ceiling and this intervention is to maintain a balance between the textile industry and farmers. The government has many stakeholders. If I leave it entirely to farmers and traders, there could a situation where all the cotton would be exported,” Khullar said.
Cotton export would be put under the Open General License (OGL). At present, the cotton price is around Rs 1 lakh a tonne. The decision to allow unrestricted exports was taken at a meeting of Commerce Secretary Khullar, Agriculture Secretary P K Basu and Textiles Secretary Rita Menon here on September 1.
