India to lift ban on cotton exports

Just after one week of imposing ban on export of cotton, the Indian Commerce Ministry is considering to take a U-turn by lifting the ban. According to the reports in Indian press, Indian Agriculture Minister Sharad Pawar and Gujarat Chief Minister Narendra Modi have slammed on the central government for putting a ban on cotton exports.
News reports revealed the change in position on the ban on cotton exports, followed by a meeting of group of ministers headed by Indian Finance Minister Pranab Mukherjee. Indian Commerce Secretary Rahul Khullar indicated that Indian government was contemplating lifting of ban on cotton exports.
The meeting itself was the result of some tough talk by Pawar who on Tuesday complained to Prime Minister Manmohan Singh, saying he was “kept in dark” on the “highly objectionable” move. He said the decision needed ratification by ministers, though the Directorate General of Foreign Trade (DGFT) had already issued an order for banning exports.
Indian press believes that it is the second major setback for Commerce and Industry Minister Anand Sharma, who also handles textiles ministry as a stop-gap arrangement. In December, the government was forced to put the decision on allowing foreign retailers to set up multi-brand store on hold, following opposition from within the congress, as well as coalition partners. Even then, it was the Department of Industrial Policy and Promotion, under Sharma’s charge that had piloted the FDI proposal.
On Friday evening, Sharma said the meeting remained “inconclusive”, but a few minutes later, the commerce secretary let out the fact that the commerce department was reviewing the ban.
Signs of softening of stance were visible through the day although the commerce department took a combative position, saying cotton exports were at a new record. But minutes before the meeting, DGFT issued a policy circular clarifying that consignments, for which “Let Export Orders” had been issued till today, will be permitted. This was meant to address criticism of policy flip-flop as traders were complaining that even they had registered for exports with the government and contracts to supply cotton were left stranded.