PAKISTAN: New Indian cotton policy may benefit Pakistan

India has allowed cotton exports without mandatory licences, but the registration process will be required, a government notification said on Tuesday. The notification said the above will come into effect from October 1, 2010, when the cotton year begins. India halted export registration on April 19 and allowed exports under licence on May 21 to rein in prices.

"It's true and we were expecting this to happen as our output this year looks comfortable," said a senior official in the textile ministry, who did not want to be identified. India is likely to produce 31-33 million bales of the fibre in 2010/11 up from 29.5 million bales in 2009/10.

Free exports will benefit flood ravaged Pakistan, which lost a large crop that fuels its export earning textile industry, trade and analysts said. Trade says Pakistan will import about three million bales (of 170 kg each) more of cotton after floods from average import of 1.5-2 million bales. "If it's free now, Pakistan will seek most of its cotton imports from us but China still will be the major buyer," said a senior official with Sekhsaria and Co, a Mumbai-based exporter.

India is the second biggest producer, consumer and exporter of cotton and about 60 percent of the current season shipments went to China, the biggest consumer. India's export in 2009/10 is estimated at 8.3 million bales. "Sentiments will be bullish in the domestic market. Despite higher production, prices will not fall much as we can export without restrictions," said Mehul Agrawal, an analyst with Mumbai-based Sharekhan Commodities. Cotton prices rose about 7 percent in the past week and the most common Shankar-6 variety quoted at 31,700 rupees per candy of 356 kg each, data with Cotton Association of India showed.

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Added: August 19, 2010 Source: YNFX
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