The Confederation of Indian Textile Industry (CITI) expressed its concern regarding the Indian cotton export to China. Comparing Indian cotton prices vis-a-viz Chinese domestic prices, it is clear that Indian cotton prices are much lower.

The import of cotton in China is controlled through quota mechanism with an import duty as high as 40%, and in contrast, import of cotton in India is under OGL (Open General License) with negligible import duty which means Indian cotton mills are free to import cotton any time they feel international prices are competitive and without any duty payment under advance License.

On the other hand, it is worth mentioning that Pakistan and Bangladesh textile mills are also in similar position as their Chinese counterparts. So far, the Indian textile industry has been enjoying the benefit of comparatively lower cotton prices to remain competitive in the world textile market.

India has enough surplus cotton even after maintaining certain amount of buffer stocks (closing stocks). The export of cotton from India have not increased proportionate to the increase in cotton production.

Further, considering record production this year and the reduced consumption trend as well as maintaining same closing stock level as per last year (2.4 months of consumption), the exports to the extent of 91 lakh bales of excess supply can be easily allowed to maintain the equilibrium in the supply and demand. Following the situation, if the export of cotton is banned, then the domestic cotton prices are expected to crash, which would be disastrous to the Indian cotton farmers, as the domestic textile industry will not pay them the fair value of their cotton.

India has become the second largest producer of cotton in the world and any effort to ban cotton export or sudden crash in cotton prices will lead to increased agony of the farmers and compelling them to shift to other competing crops.