Cotton export registrations to remain under DGFT


The cotton registration for the new season, 2012-13, continues to remain with the Director General of Foreign Trade (DGFT) under the ministry of commerce.

This is despite repeated requests of the textiles ministry to regulate cotton exports and export registration to better manage supply, demand and prices in the domestic market. The request was made especially on the back of cotton imports this year, despite India being an export hub of the commodity traditionally. Under the ministry, the textile commissioner gets to handle registration of cotton exports.

In a meeting last week, it was seen that imports were not due to rise in the domestic price of cotton or shortage in availability. These were triggered primarily due to a fall in international prices. There was contraction in the data of the two ministries as well. While the ministry of textiles has shown a total import of 1.5-2 million bales (a bale is 170 kg), commerce data shows only 500,000 bales of import this year. Therefore, the registration continues with DGFT, said sources.

Earlier, the ministry had also written to the ministry of commerce and to DGFT on this issue. Sources said the proposal had been endorsed by the minister of textiles, Anand Sharma, who also holds the commerce portfolio.

DGFT has cited instances of mismanagement of export registration, raised by cotton associations under the open general licence (OGL) in the ensuing season, commencing October. The commerce ministry had put cotton under OGL in 2011 for the cotton season ending September 2012.

In the domestic market, cotton prices are currently at Rs 37,000-38,000 a candy (a candy is 356 kg of cotton). In August, say sources in the ministry of textiles, Indian cotton mills had already contracted 10 million bales for imports and around three to four million bales have already been imported in the last two-three months. Until recently, India was a big exporter of cotton. The country’s annual harvest was 35.2 million bales, while domestic requirement was just 26 million bales. Currently, there is hardly any stock in the domestic market to feed the domestic market, a peculiar situation, said officials.

Reportedly, in the current procurement drive, arrivals in mandis have started tapering. This year, cotton output has been 33.6 million bales, of which 12.5 million have been exported, mainly to China. Against 200,000 bales of daily arrivals during the peak season, arrivals have dropped to 15,000 bales a day.

The government’s plan to create a special buffer of one million bales under the Cotton Corporation of India looks stretched because only 350,000 bales have been procured, at a cost of Rs 500 crore. The government has sanctioned Rs 2,500 crore for the purpose.