The Centre on Saturday announced that it would allow export of 55 lakh bales of cotton effective October 1 and would revisit the policy for a thorough review in mid-November indicating that shipments beyond this ceiling would attract export duty.
“For now, export of 55 lakh bales ceiling has been allowed during 2010-11. This decision will be subject to review, which will be held on November 15,'' Commerce Secretary Rahul Khullar told reporters here.
He said as per a conservative estimate, cotton production in 2010-11 was likely to be 325 lakh bales (of 170 kg each). However, the Agriculture Ministry expects the yield to touch 335 lakh bales. A clear picture on the production, industry demand and prices would emerge by mid-November, the Commerce Secretary said.
The Textiles Commissioner would start the mandatory registration of export contracts from September 15. While there would be no ban or requirement of licence for exports of 55 lakh bales at present, subsequent shipments would attract duty. ``The moment you hit the ceiling fixed at 55 lakh bales from October 1, a prohibitive export duty will kick in,'' he said. At present all cotton exports attract a duty of Rs.2,500 a tonne.
He said the amount of prohibitive duty would be decided by the Commerce and Revenue Departments. The decision to allow unrestricted export was taken at a meeting of Commerce Secretary, Agriculture Secretary, P. K. Basu and Textiles Secretary, Rita Menon, here on September 1.
The Secretaries would meet again on November 15 to review the extent of cotton exports between October 1 and November 15, production and prices of the fibre in the international and domestic markets. “On that basis we will have a revised view on what should be permitted for export and what the carry-over stock should be,'' Mr. Khullar said.
Prices of cotton are now ruling at about Rs.1 lakh a tonne, which according to Mr. Khullar is speculative. The government estimates domestic consumption of cotton at 266 lakh bales. The industry is also likely to import about seven lakh bales.
Cotton prices had increased by about 35 per cent in the global market between October 2009 and May 2010.
