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Government removes ban from cotton exports for current season

01 Aug 2011 Evaluate

Indian government has decided to remove restriction on the exports of the cotton for the current season, it also have allowed the exports of cotton under Open general License (OGL). The Commerce Secretary Rahul Khullar on said, “We have decided to lift export restrictions as there is adequate stock of cotton in the country”.

This decision of removing ban from exports of cotton has come in the wake of falling prices of commodity in the domestic market due to adequate stock in the country. Under the OGL, exporters have to register themselves with the Directorate General of Foreign Trade (DGFT) in the remaining two months of the current cotton season (October to September).

Last year in October, government had put restriction on the exports of the commodity at 55 lakh bales (170 Kg each), to check rising domestic prices and ensure availability of the raw materials. Though, in June 2011, government allowed additional exports of 10 lakh bales after the sharp correction in the domestic prices. The prices of cotton declined in domestic market drastically and got reduced to Rs 31,000 per candy (356 Kg) now, from Rs 62,500 per candy in end of last financial year.

Representatives from cotton growing states including Gujarat, Maharashtra, Andhra Pradesh, Karnataka, West Bengal, Tamil Nadu and Madhya Pradesh had written to Agriculture Minister Sharad Pawar, asking removal of export ban, due to a good possibility of carryover stock by the end of the current season. As per the estimates of Cotton Advisory Board, by the end of the current season, the cotton surplus would be 5.25 million due to lower demand from the domestic industry.  Likewise, the projection for domestic consumption of cotton this season has been lowered to 236 lakh bales, as against the earlier estimate of 265 lakh bales, on account of high inventories.

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