Due to a lukewarm response from exporters to cotton being put on the Open General Licence, policy makers are considering correctives, including incentives.
Internatinal prices have fallen sharply in recent months, bringing these almost at par with the Indian market. Sources in the Directorate General of Foreign Trade say exporters' queries have been almost nil, even after quantitative restrictions were removed with effect from August 1. With an estimated six million bales (170 kg to a bale) of unsold stock with traders, ginners and farmers, and about 400,000 bales with Cotton Corporation of India, the country is sitting on stock of at least Rs 10,000 crore.
And, the next harvest is round the corner. With these huge opening stocks, CCI will have to be prepared to buy more cotton to stop prices falling below the minimum support price. Sources in CCI say instructions have gone to gear up for the need on additional storage.
A senior official in CCI said there might be some positive development by end-September. But, he confirmed, even CCI had not been able to offload any substantial quantities in the international market.
"We are expecting a crop size of about 35 million bales this year, owing to increase in acreage and favourable monsoon," said Dilipbhai Patel, president, All Gujarat Ginners Association. With prices of the benchmark Shanker-6 around Rs 34,000 to 34,500 per candy (356 kg) this week, traders expect it to remain in the range of Rs 30,000 per candy after September, too.
