India - Textile Ministry Proposes Rs 2,500/tonne Duty on Cotton Exports.

The Textiles Ministry has proposed a duty of Rs 2,500 per tonne on cotton exports to ensure that the domestic industry, lobbying hard for export curbs, gets adequate quantity of the natural fibre.

Much to the advantage of the industry, registration of cotton exports, which was postponed till October 1, may be further delayed, sources said.

"We are proposing minimum Rs 2,500 per tonne export duty on cotton shipments," an official said.

The industry, on the other hand, has been demanding that a minimum prohibitive duty of Rs 10,000 per tonne should be levied to check the exports.

However, sources said the final call on the export duty, as also the quantity, will be taken by senior ministers including Pranab Mukherjee, Sharad Pawar, Anand Sharma and Dayanidhi Maran, at a meeting to be held on September 28.

The cotton arrivals for the year 2010-11 are expected in the market from October amidst record production projections.

Cotton production for 2010-11 season is estimated to be 335 lakh bales (of 170 kg each) compared to 295 lakh bales last year.

While the Textiles Ministry seems inclined towards imposing export duty of Rs 2,500 per tonne at the beginning itself, Commerce Secretary had said earlier this month that the export levy would kick in only after the exports exceed 55 lakh bales, the limit set by the inter-ministerial official panel.

During 12 months to September, 2010, India's cotton exports are estimated to be 83 lakh bales, triggering price spurt in the domestic market and calls for restrictions on selling the natural fibre to overseas markets.

Currently, cotton prices are about Rs 39,000 a candy (a unit of measurement equal to 355 kg) compared to Rs 23,000 during the same period last year.

However, a clear trend would emerge from the first week of October when there are fresh arrivals of the natural fibre.

The government had restricted cotton exports last year, but the decision came in for criticism from the Prime Minister's Economic Advisory Council (PMEAC), which wanted fixing of the targets well in advance of the season.

Source : yarnsandfibers.com