The commerce and textiles ministries, headed by Anand Sharma, were forced to refer the issue of cotton export ban to a Group of Ministers (GoM) after agriculture minister Sharad Pawar labeled it 'highly objectionable'. 'I was kept in the dark on the issue and have requested the PM for revocation of the ban. Our production is higher this year and farmers are complaining of falling prices,' said Pawar, a key ally for the government, in the aftermath of the poll debacle in UP, Punjab and Goa.
After the ban the benchmark May cotton contract on ICE Futures US exchange rising 1.53% to 93.64 cents a pound on Tuesday, down from the day's high of 94.24 cents. The contract is at its strongest level since mid-February. On MCX, futures contract maturing in May rose 1.6% to Rs 17,500 a bale.
On Monday evening, the directorate general of foreign trade had banned the export of cotton. 'Currently textiles mills are carrying their lowest ever stocks in the past decade. Given the tight liquidity position in the industry, it is not possible for them to procure larger quantities to cover their future requirements at this stage,' DGFT said in a statement that elicited immediate protests from farmer groups and Gujarat CM Narendra Modi.
While the government was unmoved on Monday, it shot into action after Pawar's outburst. In a matter of hours, textiles secretary Kiran Dhingra told a press conference that the decision will be put up to the GoM, headed by finance minister Pranab Mukherjee, on March 9 for review and consultation.
'While taking such a decision, it is always proper to discuss it in Cabinet Committee on Prices or in Cabinet Committee on Economic Affairs as is done with wheat, rice, sugar. So I have raised this issue with the Prime Minister,' Pawar said on Tuesday.
Dhingra, however, said the decision was taken by a panel comprising secretaries from commerce, agriculture and textiles departments. She responded to Pawar's charge that he 'was kept in the dark'. 'Unfortunately, when our minister (Sharma) was in town, the agriculture minister was out of town and when the agriculture minister came back to the country, our minister had already left,' she added.
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