India, the world's third-largest producer of cotton, is considering offering subsidies to exporters looking at the foreign markets to beat a domestic glut, Agriculture Minister Sharad Pawar said on Friday. Traders are estimating about 20 million bales of cotton production this year, a sharp rise from 17.7 million in the previous year.
They said the high output was also expected to keep prices under pressure and chances of exports were remote this year as world prices were also seen falling due to a good global crop.
"The government is considering a proposal on a subsidy for cotton exports.
We have received suggestions on this from cotton-producing states," Pawar told reporters.
Several cotton producing states such as Maharashtra and Gujarat had approached the farm ministry seeking incentives for exports, Pawar said.
He said the farm ministry, in consultation with the commerce ministry, would consider working out incentive schemes to boost exports, as it did for sugar when the country was saddled with huge stocks.
The government offered a subsidy on transport and ocean freight to sugar exporters two years ago to cut bulging stocks.
Traders said domestic prices of cotton were expected to fall by five to 10 percent in the coming weeks, with rising supply from the new crop and slow buying by mills.
India exported about 800,000 bales of cotton to neighbouring countries last year, taking advantage of lower prices in the domestic market compared with prices in countries such as Pakistan and Bangladesh.