our apprehension is that such an exercise will lead to massive manipulation. Moreover, if the estimates of the cotton production change frequently, what would be the exportable surplus and how would traders plan their exports in such a case?" asked Dhiren Sheth, president, Cotton Association of India, the apex traders' body.
Moreover, the biggest opposition to tax exports would come from the agriculture ministry, which has favoured a liberalised regime. The ministry feels any move to tax exports would lead to a reduction in returns for farmers.
The government officials said the ministries of finance and commerce are expected to back the proposal for an export duty whenever necessary. The finance ministry said the IMG would suggest the appropriate export duty from time to time.
Although there is already an enabling provision of an export duty of up to Rs 10,000 a tonne, any duty beyond this can be imposed only through a finance Bill.
For its part, the Planning Commission has suggested a 5-10% ad valorem export tax on the fibre instead of the 10% duty on exports beyond the surplus quantity and observed that determining the surplus quantity is "highly uncertain and liable to manipulation", said one of the officials.
But the Prime Minister' Economic Advisory Council suggested a minimum level of import and export duty of 10% on the fibre.
The cotton export policy sparked a heated debate in the last two years as the textiles and the agriculture ministries sparred over allowing more shipments to gain from a global shortage.
While the agriculture ministry pushed hard for allowing more exports, the textile ministry — the nodal ministry for cotton distribution — opposed any such move fearing spiralling of prices and an adverse impact on cash-hit textile mills.