Cotton export duty to check rising prices

The government is hoping a Rs 2,500-per-tonne duty on raw cotton exports will neutralise rising prices in the domestic market while helping to salvage Indias presence in the international market.

The government is hoping a Rs 2,500-per-tonne duty on raw cotton exports will neutralise rising prices in the domestic market while helping to salvage Indias presence in the international market. The Central Board of Excise and Customs will likely impose the duty which has endured a sharp rise in prices since October 2009.

The measure follows the decision by a high-level meeting chaired by finance minister Pranab Mukherjee last week. The export duty had been levied for six months,said a source in the textile ministry. The domestic textile industry has been pitching for cotton export restrictions in the wake of steep rise in prices of the natural fibre.

We appreciate the efforts made by textile minister Dayanidhi Maran in this regard, reads a written statement

issued by the Apparel Export Promotion Council (AEPC). The governments move to suspend the duty concession

of 7.5 per cent for cotton yarn exports under the Duty Entitlement Pass Book (DEPB) scheme will bring down fabric prices to realistic levels.

The price of Shankar-6 variety,the premium quality of cotton,has risen to around Rs 28,500 per candy from around Rs 25,000 per candy (356 kg) in November 2009. India,the worlds second largest cotton producer,exported 2.36 million bales (of

170 kg each) of cotton last season (from October 2008 to September 2009).

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The ministrys action is in chorus with the governments efforts to help recuperate the struggling sector. Theres a fear that the government will become uncompetitive as prices continue to rise,wages are enhanced by 30 to 40 per cent and China provides the product at a fraction, director general foreign trade RS Gujral told The Indian Express.

Besides,the government is taking steps to ensure that there is adequate availability of cotton in the country. It was decided that there should be a carry-forward stock of about 50 lakh bales of raw cotton at the beginning of the next cotton season (starting October 2010), the textile ministry official said.

Besides,a 3 per cent duty on export of cotton waste has

also been imposed. Last week,the government also imposed

restrictions on export of cotton yarn,making it mandatory

for exporters to register their shipments with the textile

commissioner.

The sector is also working under a ministry-imposed ultimatum which would ban cotton exports if supply of the material does not exceed 50 lakh bales this season.

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As per a notification by the DGFT,export consignments of cotton yarn would now have to be registered with the textiles commissioner before they can leave the country.