Registration for cotton exports is all set to cross the exportable surplus of 80 lakh bales (170 kg each) estimated by the Cotton Advisory Board.
But, the Textile Ministry is undecided on whether it should ban exports or release part of the stocks held by the Cotton Corporation of India in the domestic market to cool prices.
“Placing a ban on cotton exports is a politically sensitive issue. Last year, the ban created a lot of bad blood between Textile and the Agriculture ministries. We do not want a repeat of that,” a Textile Ministry official told
The Ministry is also not sure if it should release a part of the cotton stock held by the public sector Cotton Corporation of India in the domestic market at the current prices.
Since prices are still rising, it could later be held accountable for selling cotton at a lower price when it could have gained by selling at a later date, the official said.
The advisory board advises the Government on cotton policy based on the production and price situation in the domestic and global markets.
Limit breached
Textile Ministry officials said that the export limit may well have been breached as there is heavy demand in the international market since China is buying cotton to build its stock.
In fact, the Cotton Corporation that makes market intervention purchases when domestic prices fall below the minimum support price has registered 10 lakh bales of cotton with it for exports.
The Directorate-General of Foreign Trade that registers cotton for exports does not seem to be too troubled by the rise in registrations.
“Cotton availability in the country is normal and there are no signs of a shortage. We are not too worried about numbers being breached as the Cotton Advisory Board keeps revising them,” a DGFT official said.
Prices rise
Domestic textile industry, however, is crying itself hoarse over the increase in prices of cotton that have risen about 15 per cent over the last few months.
A ban on exports would ensure continued availability of cotton in the domestic market and cool prices.
The Textile Ministry is, however, jittery as any ban on exports could lead to protests from the Agriculture Ministry and cotton growing States of Gujarat and Maharashtra, like last year.
Moreover, some might argue that cotton prices are not high enough to justify a ban.
Releasing the stock
The other option being explored by the Textile Ministry is to ask the Cotton Corporation to release the cotton stock held by it in the market to ease prices.
It has about 25 lakh bales of cotton in its stock.
“The question that is hounding the Textile Ministry is whether it should release its stock at current prices in the domestic market when there are indications that prices would rise further in the coming months. It would lead to losses to the exchequer and the Textile Ministry would be held accountable for that,” the official said.
amitisen@thehindu.co.in