CITI Calls for Restrictions on Annual Cotton Exports
The Confederation of Indian Textile Industry (CITI) is calling for annual cotton exports to be restricted to the 5.5 million bales already announced by the Indian government.
When registration of cotton export contracts opened on October 1, 5.5 million bales earmarked for registration were applied for in ten days. According to the confederation, allowing cotton exports to take place from November 1 onwards has removed a substantial portion of the crop arriving in the market, creating an artificial shortage.
The result is that there is hardly any cotton available for domestic mills to buy, a situation which can only be improved if exports are postponed, said CITI.
The confederation is therefore requesting that any quantities of the 5.5 million bales registered for export contracts, which remain unshipped up to the stipulated last date of December 15, should not be released for shipment or fresh registration for at least two months. It is hoped that by that time the amount of cotton arriving into the market will have picked up.
The group is also calling on the Indian commerce ministry to provide sufficient export incentives to the value added industry segments until overseas markets are able to fully absorb the increase in raw material costs. The confederation wants the Indian government to support the consolidation of production facilities in these segments, to help bring their efficiency levels on to a par with global competitors.
A further suggestion made by CITI is that any registration of cotton export contracts should be allowed only against Letters of Credit, instead of on the previous Cash Against Documents (CAD) basis, for which no documents other than a contract was necessary.
Finally, the confederation opposes the introduction of any new controls on exports or prices of cotton yarn, in the long term interest of the entire textile value chain.
CITI comments come in response to the unprecedented increase in cotton prices in India over the past few months. On October 2009, a candy (356kg of raw cotton) was worth Rs.23000 ($508). Earlier this month this price rocketed to Rs.47000 ($1,038).
Source : inteletex.com