Chennai, Aug. 28

The domestic textiles industry shall have the fullest use of the country's cotton crop, and only surplus cotton will be allowed to be exported, the Union Commerce Secretary, Dr Rahul Khullar, said on Saturday.

At a press conference here, held after an Open House meeting organised by the Federation of Indian Export Organisations (FIEO) and the Federation of Indian Chambers of Commerce and Industry (FICCI), Dr Khullar said that the Ministry had to balance the interests of both farmers and the industry.

The spinning (textile) industry has been asking for a ban on cotton exports so that the raw material is made available to the domestic industry. The growers and traders, on the other hand, want exports to be allowed because global prices are attractive – because, the recent floods have finished Pakistan's crop and China's cotton yield is much below expectations.

Spot prices of cotton have shot up to Rs 34,300 a candy (of 356 kg) compared with Rs 31,000 only a month ago.

Dr Khullar said that there would be a meeting of the Ministries of Commerce, Agriculture and Textiles, after which the Government would arrive at an estimate of the cotton crop and the needs of the domestic textile industry. Only surplus will be allowed to be exported.

The Government would arrive at a figure of ‘exportable surplus' (which would be fine-tuned as the crop comes up). Up to the extent of the surplus, traders have unrestricted freedom to export – only they have to register themselves with the Textile Commissioner. On any export beyond the surplus, there will be a levy, Dr Khullar said.

Industry not impressed

The textile industry is not impressed. Quoting the latest figures given out by the Cotton Advisory Board, sources in the industry say that the current stock of cotton available in India is 40 lakh bales – split as 32 lakh bales with various mills and 8 lakh bales with the Cotton Corporation of India (CCI). “The cotton available with the CCI is the old, left-over stock which is not spinnable,” says Mr Manickam Ramasami, Managing Director, Loyal Textiles Ltd, and a leading textile exporter from Tamil Nadu.

The stock available currently is not sufficient to last even a couple of months. On the other hand, the earliest arrival of cotton from the new crop will be not earlier November.

“The Government should have at least said categorically that no exports will be allowed till December,” Mr Ramasami told Business Line today, reacting to Dr Khullar's statement.

Waste cotton

At the Open House session today, one exporter (Amaravathi Textiles of Karur) called for banning export of cotton waste (an output of spinning mills).

Cotton waste is used by the handloom industry – products such as bedsheets that are used by the poor are made out of it.

Because the Government has allowed exports of cotton waste, the prices of this commodity is also going up.

After Dr Khullar said recently that export of cotton waste would be allowed, prices have shot up to Rs 58 a kg now, from Rs 43 a kg only a fortnight ago, say industry sources.

“Any reintroduction of exports of cotton waste will severely affect the Home Textiles and ready-made garments segments, which are slowly emerging out of the dark tunnel of recession,” says Amaravathi Textiles.