India Reverses Course, Re-establishes Cotton Export Restrictions

Indian cotton merchants, who were eager to start trading what is expected to be an excellent crop, were stunned and disappointed when the government announced it would levy a severe export tax on any exports over 5.5 million bales (170 kg each). Less than a month ago, the government said it would lift export restrictions and taxes after Oct. 1.

Domestic production in India might increase as much as 10 percent over last year’s crop of 32 million bales, but demand from local textile companies is keeping pace, prompting the government to reverse its position on restriction-free cotton exporting. Indian officials are expected to reconvene in November to evaluate the situation after more is known about the domestic crop totals, and based on that information, could revise their position on exports yet again.

After Sept. 15, traders will be able to register their exports with India’s Textile Ministry online. The online system will help exporters — who are required to register their shipments before they take place — keep track of their application status as it moves through the process, in addition to helping the government track the amount of cotton being exported.