India could allow limited exports of cotton to cover existing sales commitments when ministers meet on the issue on Friday, government sources said, as exporters sought permission for 2.5 million bales to be released. The world's second-largest cotton producer banned exports unexpectedly on Monday as domestic demand threatened to outstrip availability, boosting global prices on hopes the move would tighten a market beset by weak demand.
Less than 24 hours later, Farm Minister Sharad Pawar called on the government to reconsider the ban, which also covered sales already registered but not shipped, as domestic prices fell. Ministers will now meet to discuss the issue on March 9. Contracts for about 2.5 million bales are already registered and awaiting shipment and government sources said some compromise might be reached on these. "There is a possibility that a window would be opened for them (exporters with unfulfilled commitments). How much quantity could be allowed I cannot say. That is something that will be decided in this meeting," one government source said.
"It's a strong argument that some exporters will be affected by the ban as they have not yet completed their contractual obligations to supply," this source said. Cotton exporters were hoping the entire 2.5 million bales already registered would be permitted, in order to avoid defaults.
"The government should allow at least whatever cotton bales have been registered with DGFT (Directorate General of Foreign Trade)," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, one of the country's leading exporters. Around 500,000 bales were lying at different ports in the country, while the government has issued RCs for another 2 million bales, he said. On Wednesday ginners in Gujarat state went on a two-day strike protesting the ban.
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