Cotton exporters may have to soon contribute a pinch of their profits as cess towards a proposed new fund, price stabilisation fund, which would be managed by the Cotton Corporation of India.
The Union Textile Ministry has put forward a proposal to create this new fund to be used at times when cotton prices undergo drastic fluctuations. Money from the fund would be used to build up a suitable inventory to bring about stabilisation in cotton prices and ensure that neither the exporters nor the farmers became a victim of a price slide.
“We will be putting forward this proposal to the Cabinet Committee on Economic Affairs and the Ministry of Commerce for discussion. Once approved, it will be mandatory for exporters to contribute to the fund,” Union Minister of Textiles K. Sambasiva Rao told media persons here today.
Although the Textile Ministry has not yet finalised the amount of cess that exporters would have to pay, the Minister indicated that it could be around Rs 1,000 to Rs 2000 per candy (356 kg) of cotton.
Exporters are currently getting about Rs 40,000 to Rs 45,000 a candy. With the weakening rupee, cotton exporters have been getting a better price, with exports estimated to touch 10 million bales this year, as against the Cotton Advisory Board’s earlier estimates of 8.5 million bales (a bale is 170 kg).
The Minister also made it clear that cotton exports would be allowed only to the extent of surplus material available after meeting the domestic demand.
He said the Textile Ministry had written to the Finance Ministry for reimbursement of the losses incurred by Cotton Corporation of India when it intervened recently and sold cotton below the minimum support price in order to stabilise prices.
“The corporation has incurred a loss of about Rs 719 crore. It will however continue to intervene in the market when needed (irrespective of the reimbursement)”, he said.
amitmitra@thehindu.co.in