The Indian government has decided to remove the ban on cotton exports as retail prices of the commodity are stabilising gradually .jpg) With the prices of cotton gradually stabilising in the country, the Indian government has decided to partially lift the ban on cotton export. Owing to limited supply leading to high prices, export of raw cotton was banned in the month of April this year. This move by the government helped in weathering the crisis situation and currently cotton prices are gradually stabilising.In this context, Rakesh M Pandya, joint managing director of Raksha’s Enterprise, a mid-sized cotton exporter and supplier in Coimbatore, Tamil Nadu, says, “With partial lifting of the ban on cotton exports from July 2, 2010, exporters will now get access to the global market where the prices of cotton are higher than India. This will help exporters to fetch high prices for raw cotton, thereby improving their profit margins and recovering losses incurred in the past few months.”
As of now, only registered exporters are permitted to ship their goods to the global market. The government will also fix the amount of cotton to be exported to the foreign markets in order to prevent non-availability of raw cotton in the domestic market.
Flipsides
While cotton exporters are overwhelmed with the decision taken by the government, players in the cotton textile industry are dissatisfied about the same. While speaking to a Retailing360 correspondent, Sharad Bhatter, treasurer of the Federation of Hosiery Manufacturers Association of India, opines, “The removal of ban on cotton exports may lead to non-availability of the commodity in the domestic market, thereby leading to a surge in the prices of cotton and cotton products in the coming days.”
Consumers in the domestic market would be affected as they would have to shell out extra bucks in order to purchase cotton garments. Therefore, the removal of ban on cotton exports might affect domestic consumers to a large extent and may compel the government to rethink its decision.
Sabrina Mitchell |
