Tamil Nadu Chief Minister M. Karunanidhi on Thursday appealed to the Centre to order an immediate suspension of cotton exports till needs of the domestic textile industry are met and sufficient arrivals in the domestic market bring about a substantial reduction in the price of cotton.

In a letter to Prime Minister Manmohan Singh, which was circulated to the media in Chennai, he also sought a cap on the level of cotton yarn exports and also provide for imposition of an export duty for the same.

He said the yarn used in handlooms, powerlooms and knitwear was different and needed to be available in sufficient quantity, category-wise, to meet the domestic needs.

He requested Dr. Singh to therefore cap the level of cotton yarn exports and also provide for imposition of an export duty on cotton yarn. “I look forward to your (Dr. Singh’s) early intervention in this regard, so that smooth flow of raw material both in terms of cotton and cotton yarn is available to fully meet our domestic needs,” he said. “It is necessary that cotton yarn exports are also moderated so that value addition is possible, downstream, in the textile industry so as to enable higher production of powerloom cloth, knitwear, handloom cloth and garments.”

He said between the last week of September 2010 and the last week of November, cotton prices had increased by almost 20 per cent. Further, hectic buying indulged in by the exporters of cotton has resulted in the arrivals to the market being woefully inadequate to meet domestic consumption.

“Normally, the period of 4-5 months after October witnesses a dip in cotton prices owing to fresh arrivals in the market. However, this year, the clearance given for exporting 55 lakh bales of cotton has resulted in a hand to mouth situation by which virtually no cotton is available in the market to build up cotton stocks.” He said competing countries such as China who are the beneficiaries of Indian cotton exports maintain stock to use ratios of about 33 per cent, whereas India’s stock to use ratio is just about 17 per cent.

Mr. Karunanidhi said it was urgently necessary to build up cotton stocks during these months of the cotton picking season lasting up to January, so that the textile sector, which provides the maximum employment, next to agriculture is kept continuously fed with raw material.