Indian government officials – with the damage suffered from strained relations between the agriculture and textile ministries still fresh in their minds – are considering their options as the amount of “exportable surplus” of cotton nears its pre-set limit of 8 million bales.
To ensure the availability of raw material required by its domestic textile industry, officials have two choices: ban the export of cotton fiber for the third time in four years, or release stocks from the government-owned Cotton Corporation of India.
Prices are still on the rise at this point, so any cotton sold by the government now would probably fetch less than it would if it were released at a later date. However, the last time cotton exports were banned, it generated a significant amount of animosity between the Ministry of Textiles and the Ministry of Agriculture – not to mention damaging India’s reliability as a trade partner in the global marketplace.
With prices climbing about 15% over the last few months, the textile industry is fretting about increasing costs and exerting as much pressure as it can on the government to take action. The question is, which of the two evils will officials choose: lose money by selling off some of the 2.5 million bales held by the Cotton Corporation of India at current prices, or anger the Ministry of Agriculture (as well as millions of cotton growers) by banning exports?