The Textiles Ministry on Wednesday said it plans to bring a cotton distribution policy that proposes to impose a 10 per cent duty on shipments of the commodity beyond a declared exportable surplus. The move is aimed at bringing stability in prices of the natural fibre.
“India produced 350 lakh bales of cotton in the 2012-13 season (October to September) and in the next season it will be between 370 and 400 lakh bales which means we will have enough of cotton. To bring in stability in prices for the millers, spinning mills, weavers and growers, we proposed the Cotton Distribution Policy,” Minister of Textiles Kavuru Sambasiva Rao said.
He was talking to reporters on the sidelines of an ’International Convention on Promotion of Handicraft alongwith Craft Exchange Programme’ organised by Export Promotion Council for Handicrafts (EPCH) in collaboration with National Centre for Design & Product Development (NCDPD) under the aegis of Development Commissioner (Handicraft).
The proposal by the Textiles Ministry aims to put in place a stable, transparent, production and tariff driven cotton market to balance the interests of stakeholders in the entire value-chain.
Under the policy, the Ministry had recommended imposition of an export duty of 10 per cent ad valorem at freight on board (FOB) or Rs 10,000 per tonne, whichever is less, for all cotton exports exceeding the declared/revised exportable surplus.
Last week, the Cabinet Committee on Economic Affairs (CCEA) had deferred a decision on the cotton distribution policy and the matter was referred to a group of ministers including commerce, textiles and agriculture, following differences of opinion among various ministries.
The duty has been proposed to encourage shipments of value-added textiles. The Cotton Advisory Board (CAB), under the Textiles Ministry, usually meets every quarter to estimate cotton output, consumption, exports and imports but it has not come out with any review since April this year. Also, the CAB is yet to come out with its review on cotton for the next year.
As per the CAB, India’s cotton production was estimated at 340 lakh bales (170 kg each) for the 2012-13 season against consumption of 270 lakh bales and exports of 81 lakh bales.
However, the country has exported about 100 lakh bales of the natural fibre in the 2012-13 season compared to about 127 lakh bales in the previous year.