Export of cotton prohibited with immediate effect

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Export of cotton prohibited with immediate effect
Directorate General of Foreign Trade (DGFT ) issued Notification dated 5th March, 2012 prohibiting further export of cotton till further orders with immediate effect.

Almost 94 lac bales have already shipped out, against an estimated export surplus of 84 lac bales.

Ministry of Textiles has been monitoring the raw cotton production, its domestic consumption and import-export through the Cotton Advisory Board (CAB) from time to time.

Higher exports than anticipated in cotton season 2010-11 reduced the expected carryover of stock for the current cotton season 2011-12, from 48.30 lac bales estimated by the CAB to about 33 lac bales. Crop size estimated at 345 lac bales by CAB on 24th January, 2012 has been further adjusted on the basis of projections made by the Department of Agriculture and reduced to 340 lac bales.

Production, this season is virtually the same as last year’s, and total supply marginally lower. Expecting a slowdown in domestic demand, export surplus was pegged at 84 lac bales. Being higher than exports in the last 2-3 years, it was placed on OGL with requirement of registration for purposes of monitoring.

A review of export data showed that the limit was breached on 20th February, 2012 and exports of 91 lakh bales made by 29th February, 2012. At this rate, it is expected that exports would reach 100 lakh bales by mid-March 2012. This is clearly reflected by the registration of exports which reached 120 lakh bales.

Significantly, there was a rush for registration after the figure of 84 lakh bales was reached and in some cases L/Cs have been registered where the name of exporting and importing party is same. This is indicative of a tendency of hoarding in bonded warehouses abroad.

The decision to ban further exports took into account the trend of domestic consumption and depletion of domestic availability. Availability has reduced to less than the production levels of 2009-10, and also reduced the carry forward figure below the advisable inventory level.


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