Govt to ban cotton exports after assessing local supply

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By Soumik Dey, Edited by Madhumita Sen Choudhury/NewsWire18

The government will take a decision on clamping a ban on cotton exports after assessing the domestic demand and supply situation, Textile Secretary Rita Menon said. "We are closely watching the price scenario in cotton. Any decision to impose a ban on exports will depend on the domestic supply situation," Menon said. The current rise in cotton prices is in tune with an increase in domestic demand and supply situation, she said.

Domestic prices of cotton have been on the rise despite increase in production expected this year. Several industry bodies have approached the government seeking a ban on cotton exports citing price rise due to increase in exports of raw cotton. The Southern India Mills' Association has also demanded a blanket ban on cotton exports, saying overseas sales were jacking up local rates.

Traders said despite good crop arrivals, prices of leading varieties had shot up 8% primarily due to a surge in export demand. Cotton exports in October, including those of the most sought-after Gujarat Sankar6 variety, surged 300% to about 116,000 bales from a month earlier, according to a Cotton Association of India official.

Export demand has risen on the International Cotton Advisory Committee's forecast in its November review that 2009-10 world output of the commodity was likely to fall 5% on year to 22.3 million tonne. State-owned agencies on Wednesday procured 1.8 million bales (1 bale = 170 kg) of cotton at minimum support prices, Menon said.

Jute Boost
Menon said production of jute in the country is expected to get a boost with the government announcing a scheme to reimburse jute mills 5% of their production cost. The packaging fibre is also expected to get a new market with its usage as a strengthening material in road development projects. Earlier, Textile Minister Dayanidhi Maran said, "Jute geo textile can have business potential of Rs 12.6 billion with the national highways being upgraded by the government."

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