In the wake of cotton exports from India during 2008-09 likely to fall by 60 per cent due to higher domestic prices compared to international price levels, India may fail to achieve its target of exporting cotton worth $ 55 billion by 2010.
Buoyed by increased cotton exports from the country over the last couple of years, the Union government had set a target of exporting cotton worth $55 billion by 2010. However, recession has led to reduction in Indian cotton buying by the US and UK, the top cotton buyers from India.
“We may not be able to meet the target by 2010. India is likely to achieve 70 to 80 per cent of the target set by the government,” said Union textile minister Shankarsinh Vaghela.
Increased buying by Cotton Corporation of India (CCI) at the Minimum Support Price (MSP) has kept the domestic cotton price at a level, which is higher than the prices prevailing in the international markets. “CCI will continue to buy cotton from farmers. Cotton buying by CCI is likely to put Rs. 2,500 to Rs. 3,000 crore burden on government”, he added.
The central cotton procurement agency estimates its purchases to touch 100 lakh bales this year.
Higher domestic prices compared to international price levels have already taken a toll on cotton exports this year. India has exported 4 to 5 lakh bales of cotton by the end of december 2008, while the exports during the same period in 2007 had stood at 45-50 lakh bales. Marketmen estimates suggest 60 per cent fall in cotton exports this year.
“This year India may be able export only 30-35 lakh bales of cotton. Last year it had exported about 85 lakh bales of cotton. Higher MSP is the main factor for the present scenario of cotton market.” said Arunbhai Dalal of Ahmedabad based Arunkumar & Co.
Source : Business Standard