“We are currently in the process of finalizing a mechanism to bring down the prices (of cotton), which have risen mainly on account of hoarding by the middlemen. The proposals under discussion include a ban on cotton export and reduction in import duty,” a textile ministry official said. .Prices of cotton are shooting up despite the estimated production of 31.5 million bales (of 170 kg each) against the domestic consumption of 24.1 million bales. Exports are expected to rise about 47% to 8.5 million bales in cotton year 2007-08 against 5.8 million bales in the previous year, according to data available with the Cotton Corporation of India (CCI). Exports are expected to go up to 9.6 million bales in 2008-09, according to industry estimates. CCI has sold 173,000 bales for export out of the 985,000 bales it bought from growers this year. October-September is the cotton year for the Indian crop.“Higher cotton prices would have an impact of 10% on the profit margins,” said an official. “Middlemen are hoarding cotton in anticipation of higher demand from China. As soon as the demand from China softens, domestic prices tend to soften. The government may, however, take some ad hoc steps to rein in the present price situation,” the ministry official said. China is the major buyer of Indian cotton, accounting for 60% of the country’s exports. .The government is also considering the option of bringing down import duty on cotton. Presently, raw cotton attracts an import duty of about 14.7%. Textile minister Shankarsinh Vaghela had earlier said he would take up the matter with the prime minister.Source: TheEconomicTimes.IndiaTimes.com”