BUSINESS

DEPB scheme restored for cotton, cotton yearn

The Centre on Tuesday announced restoration of the popular duty entitlement pass book (DEPB) scheme for export of cotton with retrospective effect from April 1 and on cotton yarn from October 1, 2010, following a sharp fall in the domestic and international prices of these commodities.

Commerce and Industry Minister Anand Sharma, who also holds additional charge of the Textiles Ministry, said, “I have taken a composite review of the cotton and cotton yarn industry in the last few days. Both segments have faced huge fluctuations in the international and domestic prices.''

He said the government policy had been calibrated in the last one year. Cotton yarn had been placed under Open General Licence for exports from April. Therefore, the DEPB scheme for exporters had been made effective from that date. The government had withdrawn the scheme on cotton and cotton yarn in April last year.

Welcoming the move, the Confederation of Indian Textiles Industry said it would give relief to the cotton yarn sector as it was making losses due to withdrawal of export incentives and had huge inventories.

Sharp rise in prices

Exports of cotton were dis-incentivised by virtue of export tax, following a sharp rise in prices in January. With easing of export curbs, the DEPB scheme has also been restored. Prices took a reverse turn by the end of March and fell sharply in the global and domestic markets. However, restrictions remain on export of cotton, that is, 65 lakh bales this year.

After peaking at Rs.62,500 a candy (356 kg) in March-end in the domestic market, cotton prices have crashed to Rs.31,000 a candy now.

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