Public sector Cotton Corporation of India has sought permission to export 10 lakh bales (170 kg each) of cotton - roughly half the stock held by it - in a representation to the Directorate General of Foreign Trade (DGFT) to benefit from the higher international prices.

The Textile Ministry is also keeping an eye on rising registration of shipments for exports by private traders as high exports could lead to a shortage of cotton in the domestic market, two Textile Ministry officials told Business Line.

“We want CCI to export some of its cotton stock as it would get a higher price in the international market.

“We have sought the DGFT’s views on the matter,” the first official said.
Registration

At the same time, the Textile Ministry does not want exports to result in price spiral as it would lead to a shortage in the domestic market and further push up rising prices.

Traders are free to export cotton at the moment after they register their shipments with the DGFT. “Registration of cotton shipments with the DGFT for export may have already crossed 80 lakh bales, the exportable surplus calculated by the Cotton Advisory Board (for marketing year August-July 2012-13), and higher registration could lead to a shortfall in the local market,” another official said.
minimum support price

CCI is sitting on a stocks procured at a revised minimum support price (MSP) of Rs 3,900 a quintal and wants to benefit from the export market where prices are higher than the current domestic prices ruling at about Rs 4,300 because of demand from China.

“The CCI has already suffered severe losses by selling much below the MSP. Now that there is a window to make some profits, we do not want it to lose out,” the first official said. Textile manufacturers bodies’ including the Texprocil and the Confederation of Indian Textile Industry, have been demanding that the CCI release its stock in the domestic market to cool prices that have jumped about 20 per cent in the past few months.
exportable surplus

High registration of cotton for exports could turn into a problem for the Government if the amount goes much above the exportable surplus.

Last year, the Government banned export of cotton when it suddenly realised that the exportable surplus had been exceeded.

It later allowed the registered shipments to be exported following protests from traders and the Agriculture Ministry.
cotton export policy

Interestingly, while the registration of cotton exports has been rising steadily, the Committee of Secretaries on cotton decided to continue with the cotton export policy when it met late last month.

The Committee comprises secretaries from the Ministries of Commerce, Agriculture and Textiles