Taking Agriculture Minister Sharad Pawar and textile industry by surprise, the Commerce Ministry Monday banned cotton exports apprehending shortfall in domestic market and hoarding in warehouses abroad.
The move has also come in for a sharp criticism from Gujarat Chief Minister Narendra Modi who said in a letter to Prime Minister Manmohan Singh that he was “shocked” over the decision that would prove “disastrous” for farmers.
Within hours of the Directorate General of Foreign Trade (DGFT) in the Commerce Ministry announcing the ban with immediate effect, a surprised Pawar told reporters: “I have not heard about it and I am coming to know about it from you”.
Explaining the rationale, the Textile Ministry, which is also under the additional charge of Commerce and Industry Minister Anand Sharma, said the decision was taken in view of exports in the current marketing year (October-September) exceeding the surplus by 10 lakh bales. Exportable surplus for year was pegged at 84 lakh bales.
Besides, the sudden rush for registration of export contracts was indicative of hoarding by Indian traders abroad, it said. “In some cases, the letter of credits has been registered where the name of exporting and importing party is the same. This is indicative of a tendency of hoarding in bonded warehouses abroad”.
The user textile industry was taken by a surprise.”The ban has surprised us. We had not asked the government to intervene and ban cotton exports. The industry has enough supply of the natural fibre to meet the present requirement since there is not much demand both domestically and globally,” CITI Secretary General D K Nair said.
Cotton prices have not shown any volatility and the commerce ministry’s decision seems to be a pro-active step.
Last year too, the government had imposed restrictions on cotton exports for few months.
PTI