New Delhi: Fearing a shortfall of cotton in the country, the Confederation of Indian Textile Industry (CITI) has written to the Prime Minister’s Office to delay the cotton exports contracts that are being registered with the textile commissioner to January 1, 2011.
According to the registration contract, the exporters are committed to ship out 55 lakh bales of cotton by December 15 this year.
According to CITI, the quantity of 55 lakh bales that government had assessed as exportable surplus for the entire cotton year 2010-11 (October-September) has already been applied for registration with the textile commissioner.
The exporters are committed to ship out this quantity by December 15 as per the stipulations of registration which implies that they would need to acquire the quantity latest by end of November.
However, the arrival of lint cotton in the market until November 30 would be only around 60-65 lakh bales (excluding kapas in transit and process) and consumption during the period would exceed 45 lakh bales.
CITI says that even if last year’s ending stock of 40.5 lakh bales is taken into account in full, there will be practically no cotton stock left in the country if 55 lakh bales get exported during this time. This will lead to a cotton famine in the country and mills will be forced to close down or scale down production drastically.
In a letter to Prime Minister Manmohan Singh, the chairman of CITI Shishir Jaipuria has made certain suggestions which includes that shipment of 55 lakh bales cotton to be staggered over the months by stipulating a monthly cap of 10 lakh bales from January 2011 onwards.
The letter says that no extension of time should be allowed for those who fail to ship within the stipulated time and further applications for registration should not be accepted from them. Jaipuria further suggests, “An export incentive of 1.5% is given by government on cotton exports and this may be withdrawn and export duty put into operation at the earliest.” It further says that cotton exports against contracts already registered with Textile Commissioner should be delayed up to January 1, 2011.
