The government has put a cap of 55 lakh bales for the 2010-11 season to protect the domestic textiles industry

The Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee is all set to meet on Wednesday to take a decision on allowing further export of cotton beyond the current ceiling of 55 lakh bales for the current season.

The Central Government has come under pressure from various quarters to raise the limit for exports and a decision on this is expected to be taken at the meeting on Wednesday. The fact that Government is actively considering lifting of the ceiling beyond the 55 lakh bales limit came when the Political Secretary to the Congress President, Ahmed Patel, on Monday urged the Prime Minister, Manmohan Singh, to further allow cotton exports to save the farmers from suffering losses.

The government had put a cap of 55 lakh bales (170 kg each) on natural fibre exports for the 2010-11 season to protect domestic textiles industry in the wake of rising prices of the raw material. Cotton season runs from October to September. “There are demands from farmers and ginning industry to allow further exports of the natural fibre in the current cotton season. The GoM will take a call on this issue,” officials said. The ceiling on export was decided by the GoM which also included Agriculture Minister Sharad Pawar, Commerce and Industry Minister Anand Sharma and Textiles Minister Dayanidhi Maran.

The Agriculture Ministry, supported by the Commerce Ministry, has demanded that the 55 lakh bales limit must be raised without any further delay. After peaking at Rs.62,500 per candy (356 kg) in March-end in the domestic market, cotton prices have crashed to Rs.45,000 per candy now. According to the Cotton Advisory Board figures, the crop forecast for the current season has been lowered to 312 lakh bales in April from 329 lakh bales due to unseasonal rains in states like Andhra Pradesh and Maharashtra in last December.

“The government must allow cotton exports immediately or those holding stocks will have to bear heavy losses. Traders will not be able to pay fair prices to farmers, which could lead to social unrest,” Mr. Patel said. He said that he had received representations from various trade bodies in Gujarat as well as from other parts of the country and expressed hope that the GoM will take a decision in favour of the farming community.

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