Cotton growers, ginners and exporters, who were troubled by the plunge in cotton prices in recent months, finally have something to rejoice upon.
The government on Sunday withdrew the ban on exports of cotton for the remaining part of the current cotton season (2010-11) and put it under Open General License (OGL). The Indian cotton season runs from October to September.
The government took this decision, amid high seasonal cotton inventory and crash in cotton prices by as much as 50 percent.
This was announced by the Commerce Secretary – Rahul Khullar, who said cotton exporters will henceforth have to only register with the Directorate General of Foreign Trade (DGFT).
The decision was taken at a meeting of secretaries of the Commerce, Textiles and Agriculture Ministries held last week.
It may be recalled that last month, the government had permitted exports of an additional one million bales of cotton (1 bale = 170 kg) over and above the 5.5 million bales it had permitted earlier.
Cotton prices and of Shankar - 6 in particular, which is the highest exported variety from India have crashed from a peak of Rs 63,000 per candy (1 candy = 356 kg) in March to just Rs 30,000 per candy last week.
The build up of yarn stocks across most of the spinning mills in India, led consequently to a steep drop in demand for cotton also called white gold, in the last few months.
The Cotton Advisory Board (CAB), which in February had estimated the cotton surplus at 2.75 million bales at the end of the current season, revised it to 5.25 million bales, due to the slowdown in demand.
Domestic consumption of cotton has also been revised for this season and lowered to 23.6 million bales, as against earlier estimate of 26.5 million bales.
Source : Fibre2fashion.com