Centre okays export of 20 lakh tonnes of cotton

The bumper cotton output this year has prompted the government to allow its export for the first time. However, as the surplus is estimated ...

The bumper cotton output this year has prompted the government to allow its export for the first time. However, as the surplus is estimated at 46 lakh bales, the export ceiling for 2004-05 season has been fixed at 20 lakh tonnes.

And to make the Indian cotton compete against its nearest rival ‘Afzal’ of Pakistan, the Cabinet Committee on Economic Affairs on Wednesday night approved a ‘cost neutralisation’ to subsidise the costs incurred in bringing the cotton from hinterland to the ports.

Though the Indian quality is equally acceptable, the price of Pakistani variety for South Asian destinations is about 3 cents less than its Indian counterpart.

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The main markets for Indian cotton would be Bangladesh, China, Indonesia, Taiwan and Thailand. The exports would be routed through Cotton Corporation of India and Maharashtra Cotton Federation, said Finance Minister P. Chidambaram.

While taking care of the immediate cotton glut, the CCEA also approved an interest subsidy for textile processing units under Technology Upgradation Fund to shore up future demand for cotton.

Under the scheme, those setting up processing units would get an interest subsidy of 8 percent while tying up loans for the machines. This would bring down the effective rate of interest on such loans to 3.5 percent.

However, this subsidy would be available only until 2007 to ensure that there is a rush to avail the soft loan and increase the country’s textile processing capacity which is currently a little above 10 per cent than what is required.