India’s flip-flop on cotton exports hurting textile industry: Fitch

NEW DELHI, (Asia Pulse) – Rating agency Fitch said that India’s partial lifting of a ban on cotton exports has led to uncertainty over prices and time of purchasing of the natural fibre by the domestic textile companies. “This uncertainty on cotton price movements could over the long term increase raw material price risk and inventory carrying risk for textile companies, which have been struggling to manage liquidity and working capital in a difficult operating environment,” it said in a statement.

On March 5, government had imposed the ban on cotton exports on grounds that the country had already shipped 10 lakh bales more than the exportable surplus and it had reduced the domestic availability.

However, the government lifted ban on cotton exports under political pressure on March 12 adding that it will take some time before exports resume, as Commerce and Textiles ministries will “scrutinise and revalidate” the registrations.

The report would be submitted by the ministries to the group of ministers, expected to meet within two weeks.

“The ban may provide temporary relief to domestic textile companies in the form of lower raw material prices, but the government’s policy flip-flop will give rise to un