18 Dec, 2010, 05.07AM IST,ET Bureau
COIMBATORE: Cotton prices are looking up in the domestic market as traders feel that the government may soon lift restrictions on export of the commodity.
The upbeat mood followed a change in modality for registration of cotton. The government on Thursday said cotton will now be registered with the Director General of Foreign Trade instead of the Office of Textile Commissioner in Mumbai.
The announcement lifted the price of Shankar-6, the benchmark Indian variety, by 2.5% to Rs 41,000 per candy on Friday.
Cotton prices had tumbled over the past month after the government put a cap on exports of cotton and cotton yarn. But some traders said they were not reading too much into the change in registration process.
“It is just a change of office for registration,” said Bhadresh Bhai, owner of Bhadresh Cotton Company , the largest cotton exporter in India. “It does not make much of a difference to an exporter.” But he said he expects the government to re-open cotton exports in another two-three weeks as only 30 lakh bales have been shipped out as against the authorized cap of 55 lakh bales.
On the possibility of extending the 45-day deadline to ship the already registered quota, Bhadresh said the government should penalize and not reward the non-performers.
“The government is throwing open the remaining quota and anybody including the non-performers can register again. This export policy is mainly to safeguard and get international prices for the farmers. If the government extends time for the non-performers , then farmers will not get good price,” he said.
Bhadresh Cotton had registered for exporting 4.5 lakh bales. The company said it has shipped the full quantity before the December 15 deadline.
A Mumbai-based commodity expert said the change in registration process will ensure better coordination between the customs department and the commerce ministry. But he said he was worried about transparency.
“While logistics, procedures and systems will take long time, there might also be problem regarding transparency. So we hope DGFT also opts for online registration,” he said requesting anonymity.
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