Govt To Review Ceiling on Cotton, Yarn Exports .

With expectation of higher cotton production — 34 million bales during October 2009-September 2010 — government will review ceiling on export of cotton and cotton yarn next month, commerce secretary Rahul Khullar said on Sunday.

“We will hold a meet to review ceiling on cotton yarn export in the first week of February and on cotton exports on February 10,” Khullar told Financial Chronicle.

A ministerial group, headed by finance minister Pranab Mukherjee, will consider revision in ceiling of cotton and cotton yarn. The others in the group are agriculture, textiles and commerce and industries minister. Government had originally fixed a cap on cotton export as 5.5 million bales and cotton yarn at 720 million kg during the current cotton year of October-September 2010-11. A bale is 170 kg.

Though both cotton and cotton yarn can be freely exported, government had fixed a ceiling this year after lifting restrictions imposed last year due to short supply to domestic industry and the surging prices.

Cotton prices hit the roof last year due to increased demand particularly from China after 15 per cent fall in global cotton production. But India had a good crop last year at around 32 million bales. However, due to surge in cotton exports and cotton yarn, domestic textiles industry that consumed 26-27 million bales of cotton, were hit resulting in exports restrictions since April last year.

The restrictions were lifted on October 1, 2010, with the arrival of new crops but the ceilings were fixed to protect the interests of growers, manufacturers and exporters.

The ceilings were fixed with preliminary estimates indicating a cotton production of 32.5 million bales. But, indications are that production may cross 34 million bales this cotton year.

The cotton yarn manufacturers were crying hoarse to revise the export ceiling upwards as they had already exported 720 million kg of cotton yarn by January 15. There are fears that cotton yarn production may outgrow domestic demand in the remaining two and a half months of this fiscal.

Cotton yarn prices were no doubt higher than last year as cotton prices had increased internationally due to shortage in global production and not due to shortage in domestic production. Presently, cotton is selling at Rs 42,000 a candy (356 kg) in domestic markets.

Textiles ministry is, however, against revising the exports ceiling upwards to ensure availability of cotton yarn to domestic industry at depressed prices that was not in the interest of growers.

Source : mydigitalfc.com