Government Mulls Allowing 8L Bale Cotton Exports.

The Union Government is looking at allowing an export of 8 lakh more bales of cotton. The government is going slow on exports to control domestic prices which are contributing to inflation. Of the 8 lakh bales, 3 lakh bales are expected to be reserved for the Cotton Corporation of India and the rest five lakh bales would be lifted from private players.

The government had on June 8 allowed the export of 10 lakh bales of 170 kg each beyond the earlier ceiling of 55 lakh bales for the current cotton season (October 2010-September 2011). The industry is now demanding exports of 10 to 20 lakh more bales in the coming months.

"Prices will keep falling if further exports are now allowed. We are pushing for completely free export through open general licence without quantitative restriction. International prices are stable and give Indian exporters an edge," said Cotton Association of India president Dhiren Sheth.

Export-quality Shankar 6 cotton was being quoted at Rs 32,000 per candy in the Ahmedabad market. Kapas futures were trading strong owing to expected demand in international and domestic markets. The contract for February 2012 delivery was trading at Rs 666.90 per 20 kg, up by 0.47% or Rs 3.10 with open interest at 100 lots. The contract for April 2012 delivery was trading at Rs 663 per 20 kg, down by 0.02% or Rs 0.10 while open interest in the contract was at 4,511 lots on the NCDEX .

"Only after the Cotton Association Board meeting scheduled on July 25, one would be able to know how many unsold bales are in the market and what is the revised estimated crop size. On the basis of this report, we expect the Group of Ministers meeting headed by Finance Minister Pranab Mukherjee to decide the qunatity of export," said All India Ginners Association president Bharat Vala.

Meanwhile, Tirupur Exporters Association president A Sakthivel has said the industry has lost Rs 1,000 crore in apparel exports per quarter owing to the closure of over 730 bleaching and dying units in the textile hub.

Since January, the units have been shut down following orders of the Madras High Court after they were found to be polluting water bodies.

"Over one lakh workers both directly and indirectly employed by the apparel industry are jobless. About 70% of the industries are outsourcing the job work to Ludhiana, Ahmedabad, Mysore, Kolkata and Mumbai but we still predict a production and export loss of 30% to 35%," he said while adding that yarn worth Rs 700 crore has been lying unused in spinning mills with garment manufacturers reducing their manufacturing capacities.

Cotton yarn prices of 40 count yarn were ruling at Rs 160 a kg compared to Rs 274 in February this year.

Source : economictimes.indiatimes.com