March 27, 2012

 

India extricates first batch of cotton exports after stockpiling scrutiny

 

 

Following a scrutiny to determine whether the fiber was being stockpiled outside the country, India has cleared its first batch of cotton exports, mainly to Bangladesh, trade ministry and industry officials said Monday (Mar 26).

 

Earlier this month, the government said it would scrutinise all shipments since January, after rolling back a ban on cotton exports March 12 within a week of its imposition. It had also suspended fresh cotton export registration until the review was complete.

 

The government's back-and-forth on the issue has left the market confused as nobody is sure whether the trade ministry would allow the entire 3.5 million bales of cotton, already registered for exports, to be shipped.

 

"They have cleared the exports to Bangladesh," said Dhiren Sheth, president of the Cotton Association of India.

 

The government has also cleared shipments lying on India's border with Nepal. The total quantity of shipments allowed is around 40,000 bales of 170 kilogrammes each.

 

India's trade ministry mainly suspects China of stockpiling cotton. So far, exporters have shipped about 9.4 million bales of cotton since the marketing year began October 1.

 

"We don't know the process for doing the scrutiny. Nor has the government stated by when the whole process would be complete," said a senior cotton industry executive, who didn't want to be identified.

 

Even if the government opened up export of all the quantities, it may not find any buyers in the world market after April because fresh supplies were expected from Brazil and Australia by that time, which would pull down prices.

 

"That opportunity is likely lost," the executive said. "It's not a good augury as the farmer is finding it tough to get rid of his stocks and clear the field for fresh cultivation."

 

India, the world's second-largest cotton producer, has lost faith of overseas customers because of its policy flip flops. It banned exports in April 2010, and lifted the ban before the year ended but also imposed stringent licensing rules for exports.

 

India did away with all cotton export controls last August, but maintained mandatory registration with the Directorate General of Foreign Trade, which operates under the trade ministry.

 

Cotton production in India is expected to reach a record 34.5 million bales in 2011-12, up from 33.9 million bales last year.