Hasty retreat: Govt refers cotton export ban to GoM

The ban will lower domestic prices and hurt planting prospects in the next crop season.

Gujarat chief minister Narendra Modi too demanded a lifting of the ban and wrote to the Prime Minister stating it would be disastrous for farmers.

The GoM,to be chaired by Finance Minister Pranab Mukherjee,will meets on March 9 to take a final call. The Cotton Association of India said it expected Indian exporters to face a barrage of claims and arbitration cases for reneging on contracts.

The Monday’s notification of the ban was perhaps aimed at curbing supplies to China that has been aggressively buying cotton for a government reserve to ward off any potential price volatility. But in ordering a ban,the DGFT blocked even those exports for which registration certificates had been issued.

So far,India has exported 94 lakh bales (1 bale is 170 kgs) of cotton this year,already higher than the target set by the commerce ministry. Of this,China bought about 80 per cent.

Defending the decision on ban,textile secretary Kiran Dhingra said an informal GoM had in April 2010 laid down a policy of maintaining 50 lakh bales as a carry forward balance every year. Only the surplus cotton stock may be exported. However,“exports at 94 lakh bales has brought down carry over stock for the next season to 36 lakh bales”,she said.

Pawar told reporters during the day that while taking such a decision,it is always proper to discuss it in the Cabinet Committee on Prices or in the Cabinet Committee on Economic Affairs as is done with wheat,rice,sugar. “So I have raised this issue with the Prime Minister,” he said.