The Centre is likely to finalise modalities to regulate cotton trade on Monday even as it contemplates lifting the ban on exports, official sources told Business Line .
Official sources said the modalities to regulate cotton trade are being worked out as the Group of Ministers, which had been asked to urgently review the ban by the Prime Minister, failed to reach a consensus on Friday.
Such modalities are likely to take into consideration issues such as the quantum of cotton exports to be allowed, procurement guidelines and ways to ensure that farmers get at least the minimum support price (MSP) in case of a plunge in prices.
Meanwhile, the ban on cotton exports imposed on March 5 has brought the trade to a halt in Maharashtra, Andhra Pradesh, Gujarat and Karnataka, leaving the farmers in the lurch, according to Mr Kishor Tiwari of Vidarbha Jan Andolan Samiti, an NGO.
“There are no buyers as a result of which prices have crashed,” Mr Tiwari claimed.
Following the ban, prices have crashed to levels around Rs 3,000 a quintal from the Rs 4,200 last month. In some cases, farmers had even sold at Rs 2,500 a quintal at Adilabad in Andhra Pradesh and Ghatanji, Mr Tiwari said.
“Ginners have gone on strike in protest against the ban for the past two days and there's not much business taking place,” said Mr Dhiren N. Sheth, President, Cotton Association of India.
Mr Tiwari estimates that 30 per cent of the cotton produced is still lying with the farmers and an equal amount with the local ginners and traders. This means that there's very little domestic demand. Hence, the justification given by the Commerce Ministry (that an export ban was needed to ensure domestic supplies) is far from what's happening on the ground, he said.
The Maharashtra Chief Minister, Mr Prithviraj Chavan, who was in New Delhi on Saturday, raised the issue of the cotton export ban with the Centre, official sources said.
Meanwhile, Mr S.V. Arumugam, Chairman, Confederation of Indian Textile Industry (CITI), has requested the textile mills all over the country to accelerate their purchases from farmers and ginners.
The textiles industry, he said, is surprised to note that both cotton traders and ginners have brought the cotton trade to a stand-still, creating serious problem for the farming sector.
“In anticipation of declining cotton prices because of restriction on export, traders and ginners seem to have adopted a strategy of not buying raw cotton (kapas) and they are also hoarding their existing stocks without selling them in order to create an artificial shortage in the market. This would further reduce the income of cotton farmers which will create long-term problems for the textile industry, in addition to cotton farmers themselves,” Mr Arumugam said.
The Government has already prompted the Cotton Corporation of India (CCI) to ensure that the farmers' interests are protected. CCI is, therefore, expected to make procurements in all mandis, where the prices fall below the MSP.
Simultaneously, the textiles mills have also commenced procurement operations in the country. The Government believes that the price situation is unlikely to be adversely affected by the current decision for long.