GoM rejects proposal to curb exports of cotton

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SME Times News Bureau | 26 Oct, 2013
A Group of Ministers (GoM) headed by Agriculture Minister Sharad Pawar has rejected a Textile Ministry proposal to impose a 10 percent duty on overseas sales of cotton beyond a declared exportable surplus, reports media.

The proposal, aimed at ensuring adequate domestic cotton supplies to make value-added products for export, had been referred to the GoM by the Cabinet last month.

"India's cotton production has been increasing every year. In such a situation, the GoM has recommended that there should be no restrictions on export of raw cotton and no duty on export," Pawar told reporters after a meeting.

The GoM advocated a free market for cotton and was of the view that any quantitative restriction or export duty would "penalise" farmers, he said.

The Ministry of Textiles had proposed an export duty of 10 per cent ad valorem at freight on board (FOB) or Rs 10,000 per tonne, whichever is less, for cotton shipments exceeding the declared or revised exportable surplus.

Currently, duty-free cotton exports are permitted after registering contracts with the Directorate General of Foreign Trade and there is no restriction on shipments.

The government announces the exportable surplus of cotton in September each year, factoring in supply-demand estimates by the state-run Cotton Advisory Board.

For the 2013-14 marketing year (October-September), the Textile Ministry has estimated total production at 37-37.5 million tonnes and cotton exports at 10 million bales (of 170 kg each).