Cotton export cap review on Friday

NEW DELHI: The government will consider raising the cap on cotton exports from 5.5 million bales in a meeting of secretaries on Friday.

The review follows higher cotton production estimate of 34 million bales against earlier estimate of 32.5 million bales by the agriculture ministry. "There may be a case for raising the export cap. The committee of secretaries will look at the option," commerce secretary Rahul Khullar told ET.

Last year cotton production was 29.5 million bales. One bale is 170 kgs. The industry's forecast of cotton production is even higher at 34.75 MT. "We believe that the cap could be raised by another 2-2.5 million bales," said Dhiren Sheth, president, Cotton Association of India.

The government had banned export of cotton in April last year after domestic prices rose sharply, taking a toll on textiles producers.

It cautiously decided in September to allow exports of 5.5 million bales, following robust production estimates. Export certificates with a validity of 45 days were issued on November 1 by the textile commissioner but exporters could ship just 3 million bales before they expired.

The commerce department allowed export of the remaining quantity subject to fresh registration with the directorate general of foreign trade. "Fresh certificates have been issued and exports are taking place," Khullar said. The government could issue fresh certificates after a review by the committee of secretaries.

" The government had decided to allow exports of 5.5 million bales based on production estimates of 32.5 MT. Now that production estimates are higher, exportable surplus too would be more," the secretary said.