The Indian government will allow cotton exporters to ship out any quantities which had been registered for overseas sales before March 4 but not shipped yet, said a government statement released today. After China Cotton Association (CCA)
and International Cotton Association (ICA) raised an alarm against India’s decision to halt all cotton exports, a group of senior ministers led by Prime Minister Manmohan Singh had decided to review the ban. The decision also comes after agriculture minister Sharad Pawar said he had not been consulted on the ban introduced by the Directorate General of Foreign Trade on March 5, 2012, which he warned would hurt farmers as it would lead to lower prices.
The ban is being considered as an irresponsible act by CCA and in its letter sent to the Ministry of Commerce & Industry and the Cotton Association of India, the body has strongly protested against the same. ICA too has urged India to “rapidly reconsider its policy and revoke the ban with immediate effect to enable international contracts to be executed without further defaults and reputational damage.” ICA believes the actions taken by India “will have serious consequences and a major, detrimental impact on world cotton trade,” while the CCA adds that India “should keep to the widely recognised international trade regulations” and that “all sides in Chinese cotton and textile industry will pay serious attention to the development of this issue.”
India is the world’s second largest producer of cotton -- accounting for around 22 per cent of the world’s output -- and its decision to ban all cotton exports is the second in as many years. China is India’s biggest cotton customer, taking around 85 per cent of India’s total cotton exports so far this year.
India banned cotton shipments after it exported almost 9.4 million bales of cotton (at Rs 170 a kg or $3.4 a kg) in the current marketing year, which began on October 1, exceeding an estimated exportable surplus of 8.4 million bales. The move is intended to ensure supplies for domestic mills and manufacturers.
