Tags:
Journalism of Courage
Banning cotton exports hurts the farmer,signals India as an unpredictable supplier to the world
Two days after the commerce ministry imposed a sudden ban on cotton exports,there are indications the government is preparing grounds for a facesaver. In all likelihood,a limited window may be opened at least for allowing exports for which registration certificates have already been issued by the Directorate General for Foreign Trade. Finance Minister Pranab Mukherjee is trying to assuage frayed tempers talking to Commerce,Industry and Textiles Minister Anand Sharma and Agriculture Minister Sharad Pawar,who on Tuesday complained to the prime minister that he was kept in the dark about the ban. A decision is likely at a ministerial panel meet on Friday. But clearly,such an ad hoc decision is a terrible signal the government can give to investors. For one,the ban comes at a time when India,the second largest cotton producer,is expected to see a bumper crop cotton cycle starts October 1 and ends September 30. It also eats into its pro-reform and pro-farmer credentials because it deprives the farmer,the stakeholder at the bottom of the value chain,of the best price for his produce.
Most importantly,the textiles ministrys fig leaf that domestic home textiles and garments industry will be rendered uncompetitive,since unbridled exports would pose constraints on availability at home,is untenable. Countries such as Bangladesh,Indonesia and Vietnam have been gaining market share at Indias cost despite not having any significant local raw material base. Simply put,India is less efficient than these countries. The ban on exports will only disincentivise cotton growers,reduce acreage and hurt agricultural output.
