India to allow cotton export up to 2m tonnes

Riding on bumper production of cotton, India has decided to allow export of the commodity up to two million tonnes during cotton season 2004-5.

The decision was taken on Wednesday at a meeting of Indian cabinet committee on economic affairs presided over by Prime Minister Manmohan Singh.

Bangladesh, China, Thailand, Indonesia, Taiwan and to some extent Pakistan will be the main markets for Indian cotton.

The production of cotton in the current year is estimated at 213 lakh bales and along with the opening stock of 21 lakh bales, the total availability would be 239 lakh bales, leaving a surplus of 46 lakh bales available for export while domestic consumption is 193 lakh bales.

The international prices of cotton for South Asian destinations are slightly lower than the cost, inclusive of freight, for other destinations, industry sources said.

There would be cost neutralization to make exports competitive, Finance Minister P Chidambaram told reporters after the meeting.

The finance minister said the meeting also decided to provide capital subsidy for textile processing units under the technology upgradation fund to enable the textile industry to be competitive in post-quota regime. The capital subsidy would, however, be available for a limited period and the scheme would be worked out jointly by finance and textile ministries.