A panel of ministers, headed by finance minister Pranab Mukherjee, will likely meet in around two weeks to decide whether to allow fresh registration of cotton export contracts, sources said on Monday.
The Directorate General Of Foreign Trade (DGFT) on Monday notified the government?s decision to lift a controversial ban on the cotton exports a week after imposing it, but it has suspended the registration of fresh shipment contracts.
?Issue of new registration certificates (RCs) stands suspended until further orders,? a DGFT notification said, adding that even the RCs already issued need to be revalidated. ?All RCs would need to be submitted to DGFT for scrutiny and revalidation. Exports can be effected only after RCs are revalidated,? it said.
Sources told FE that the government will probe allegations of cornering of export licences by a few unscrupulous traders, and the findings are likely to be submitted with the ministerial panel before a decision on allowing fresh registration is made. The suspicion of foul play in licence grabbing gathered pace after export registration witnessed a sudden unprecedented spurt after mid-February, a development which was partly responsible for the imposition of the ban on cotton exports on March 5.
Senior trade executives said a whopping three million bales of cotton were registered with the DGFT between February 23 and March 3 for exports. As much as 13 million bales were registered for exports before the ban was imposed, of which a record 9.5 million bales were shipped out. The country had exported around 8 million bales in the year through September 2011.
Last week, commerce and textile minister Anand Sharma raised the alarm bells saying: ?We were informed that there has been cornering of huge quantities (of cotton) by handful of big players who have exported to their own warehouses abroad. It did cause alarm.?
Announcing the lifting of the ban on Sunday, Sharma said: ?Keeping in view the facts, the interests of the farmers, interest of the industry, trade, a balanced view has been considered by the Group of Ministers (GoM) to roll back the ban.?
The ban had triggered protests by key producing states such as Gujarat and Maharashtra, and Union agriculture minister Sharad Pawar who argued farmers? income would be affected due to a resultant fall in domestic prices. Significantly, polls are due in Gujarat within a year.
Pawar also said he was ?kept in the dark? about the ban, prompting Prime Minister Manmohan Singh had to direct an urgent review of the decision by the GoM
on March 9.
Prices of the popular Shanker 6 variety rose R500 to R33,500 per candy of 356 kg each in early trade on Monday after the DGFT notified the decision to lift the ban. Prior to the move, the prices had declined 6% a candy to R33,000 per candy of 356 kg since the ban was imposed, while global prices jumped 4.5% on March 5 itself responding to the restriction.
Last week, textile secretary Kiran Dhingra said exports of 9.5 million bales have brought down carry-over stocks for the next season to just 3.6 million bales and if the entire quantity for which registration is done is allowed to be shipped, domestic supplies will be jeopardised especially after harvesting is over, Dhingra said.
The country is expecting a record harvest of 34 million bales of cotton in 2011-12, up from 33.9 million bales last year.
