Ease in cotton export norms to have no immediate impact on demand

The Centre government of India has done away with the registration requirement for exports of cotton and its yarn, the exporters now need not register with the Director-General of Foreign Trade before making the shipment. The government said on Monday in two separate notifications.

Earlier, traders were required to register their targeted export volume in advance for the entire year. With the change in rules, it is likely to speed up shipments, particularly when overseas demand for cotton and yarn has dropped sharply.

DK Nair, Secretary-General, Confederation of Indian Textile Industry, said that the development would remove the unnecessary hurdle and ease the process of export.

However, he said that it will not make any immediate impact on the demand for exports.

With cotton being procured at the minimum support price (MSP) by the Cotton Corporation of India, yarn prices are likely to come under pressure as globally cotton prices are falling.

If the cotton prices stabilize in the country in view of the MSP operations and prices fall globally, then our yarn will not be competitive, said Nair.

The Cotton Corporation of India is gearing up to procure cotton worth Rs12,000 crore this season as prices in most cotton growing States have fallen below the MSP level announced by the government.

CCI is expected to buy 60 lakh bales of cotton across Telangana , Andhra Pradesh, Madhya Pradesh and Maharashtra.

With cotton prices in the domestic market ruling five cents above the global market and China cutting down on shipment, which imported 50 percent of the 12 million bales from India last year. Cotton export from India has almost come to a standstill.

With the high minimum support price, cotton consignment from India works out to about 71 cents per pound against the now average global price of about 66 cents per pound.

The country is likely to harvest a record 40 million bales (37 million bales) of cotton this crop year that began in October. It is expected to surpass China as the world’s top producer.