Ban on cotton exports revoked

* Exports to resume only after Commerce & Textiles ministries revalidate registrations

Written by ENS Economic Bureau | New Delhi | Published: March 13, 2012 1:27:23 am

The Centre has withdrawn the ban on raw cotton exports that was imposed last week. A notification withdrawing the ban,which had led to strong protests from several quarters,was issued on Monday morning.

However,no fresh registrations for exports will be done for now,it said,adding that the process has been suspended “until further orders”. The notification also said that registration certificates issued for exports will be scrutinised again and revalidated.

“Exports can be effected only after registration certificates are revalidated,” it said. This is to ensure that no “fictitious” export transaction takes place. Also,exports will have to be completed within a month of issuing the registration certificates. But additional time will be give to those registration certificates that were valid as on March 5,when the ban was imposed.

The lifting of the ban had an immediate positive impact on the market. Immediately after the ban was withdrawn,spot prices of cotton in North India surged by Rs 500 for a candy (356 kg). In the futures market,prices were up by over Rs 1,000 a candy. However,sources said that conditions for exports have been made stringent,which could result in prices crashing in the coming days. After the ban was imposed last week,cotton prices had dropped by over Rs 1,000 to Rs 32,500-33,000 a candy before recovering to 33,500-34,000 over the weekend.

The ban on March 5 had taken all stakeholders by surprise,forcing domestic prices into a free fall and badly denting India’s image as a credible supplier in the global markets.

The decision to revoke the ban was taken by the GoM,headed by Finance Minister Pranab Mukherjee,last Friday,after a directive from Prime Minister Manmohan Singh to “urgently” review the decision.

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