India's ban on cotton exports to continue

The Government of India will continue with its ban on cotton exports, it was decided at a Group of Ministers (GoM) meeting on cotton headed by Finance Minister Pranab Mukherjee.

While no new registrations for export of cotton would be accepted, traders would be allowed to execute their pending contracts for export of about two million bales of cotton, Commerce and Textiles Minister Anand Sharma said after the meeting.

The GoM also asked the Cotton Corporation of India (CCI) to stop buying cotton from domestic market until the procurement price is approved by the Cabinet.

The CCI had earlier planned to purchase one million bales (1 bale = 170 kg) of cotton from farmers during April-May 2012 at a price of Rs. 4,500 per quintal, incurring an expense of around Rs. 2 billion.

However, the GoM did not arrive at a conclusion over the price at which the CCI should procure cotton from farmers, for creating a buffer stock.

The Ministry of Commerce banned exports of cotton on March 5, 2012 as it felt that there would be a shortfall of cotton supply for domestic needs if export is not restricted, which might necessitate import of cotton at higher prices.

However, the ban was partially lifted a week later on March 12, after the Agriculture Ministry as well as cotton growing states of Maharashtra and Gujarat strongly objected to the decision.

During the initial five months of the cotton year which began on October 1, 2011, India exported 9.4 million bales of cotton, thus leaving about 23.3 million bales for domestic consumption for the entire season, in comparison to India’s consumption of 26.8 million bales during the previous season.