India to Allow Unrestricted Cotton Exports after October 1

Starting on September 1, the Indian government will once again begin registering cotton export contracts for the next marketing year, which begins October 1. Earlier this year, a US$53.56 per ton duty was levied on shipments, and exports were banned completely from May through September. The restrictions were imposed when the domestic price of cotton skyrocketed and there were fears that local textile manufacturers would not have enough raw material to meet demand.

Although India’s cotton production is still expected to increase from 5 million tons last year to 5.1 million tons in 2010-11, local demand should increase more (from 4.3 to 4.6 million tons). As a result, the International Cotton Advisory Committee expects India’s exports to drop by 14 percent, from 1.4 million tons to 1.2 million tons.

When prices rose nearly 36 percent between October 2009 and May 2010, India’s cotton exports more than doubled, from 3.5 million bales (at 170 kg each) in 2008-09 to more 7.4 million bales in 2009-10. Commerce, textile and agriculture officials are scheduled to meet in September to review cotton price, demand and production estimates for the coming year – both global and domestic – and if there are concerns about the ability to meet the demand of local mills, the government could decide to impose limitations on how much cotton is exported. Until that time, even though exports will fall under the Open General License category, they will still need to be registered with the Textiles Commissioner.