Mumbai: Cotton output in India, the world’s second biggest producer, is likely to jump to a record 35 million bales in 2010-11, higher than earlier estimates of 32.5 million bales on better yields, a leading exporter said.

“Higher output could persuade the government to allow exports above 5.5 million bales with a tax,” Kantilal Shah, chairman and managing director of Gill & Co Pvt Ltd, which has been in the business for over a century, said in an interview on Wednesday.

Trade secretary Rahul Khullar earlier this month India will only allow cotton exports of up to 5.5 million bales in the year to September 2011.

Senior officials of agriculture and textiles ministries are slated to meet on September 27 to decide export quantities for the 2010-11 season.

“In some northern states, rains are affecting the cotton crop, but the weather is dry over Gujarat and Maharashtra. Production is likely to rise to 35 million bales on higher productivity,” Shah, who is also a member of the Cotton Association of India, said.

Western Gujarat and Maharashtra states are the top two producing states in the country, accounting for more than half of India’s total cotton output.

The government last month estimated output at 32.5 million bales.

“Possibly it (government) will allow exports over and above 5.5 million bales. But it may charge duty for those exports,” Shah said.

“Gill & Co is aiming to export 8,00,000 bales in the new cotton year beginning in October, after shipping the same amount in 2009-10,” Shah added.

He said demand from Asian importers was very strong and they were offering over $1 per lb for Indian cotton, compared with 75 cents per lb 2 months ago. Dry weather over western India will allow farmers to accelerate harvesting and cotton arrivals should peak by end-October, he added.