Nod for duty-free export of 55 lakh bales of cotton likely.

NEW DELHI: The government is likely to allow duty-free export of 55 lakh bales (one bale equals to 170 kgs) of cotton in the 2010-11 season starting next month, giving relief to cotton growers who had to face restrictions after domestic prices had spiralled.

The cotton industry, however, feels that there is scope for raising the level of export cap. The decision on allowing limited cotton exports was taken jointly by the commerce department and the agriculture and textile ministries on September 1.

“The three (secretaries) calculated the expected exportable surplus of cotton during the year after taking care of domestic requirements of the textile industry,” a government official said.

The decision is likely to be notified by directorate general of foreign trade soon. Cotton traders wanting to export will need to register themselves with the textile commissioner and would be allowed to export on a first-come-first-serve basis till the quota amount is met, the official added.

“As per our calculations, the exportable surplus should be 75 lakh bales,” Cotton Association of India president Dhiren Sheth told ET, pointing out that cotton production was expected to be good this year.

He added that the association would take up the issue with the commerce department and ask for a review. Cotton exports had been suspended by the textile ministry on April 19 2010 following complaints by the domestic textile producers. Prices increased 20% by April 2010 from the October 2009 levels, making garments costly.

The commerce department revoked the suspension on May 21 after cotton exporters and cotton growing states like Gujarat and Maharashtra protested against it.

It was, however, replaced by a stringent licensing regime, which gave the government total control over shipments. An export tax of `2,500 per metric ton on cotton was also levied. The export restriction expires on October 1, 2010.

Cotton production is estimated at 295 lakh bales and consumption at 250 lakh bales in 2009-10 season (October-September), according to a written reply to the Lok Sabha by minister of state for textiles Panabaaka Lakshmi. In 2008-09, the domestic production of natural fibre was 290 lakh bales, while domestic consumption stood at 229 lakh bales.

Source : economictimes.indiatimes.com