Gujarat chief minister Narendra Modi urged prime minister Manmohan Singh to revoke the ban imposed on exports of cotton on Monday. In a letter to the prime minister, Modi said the ban will dampen India’s prospects in the world markets and competitors like China will stand to benefit at the cost of Gujarat’s cotton farmers. 

“I was shocked to learn the immediate ban imposed by the government of India on cotton export today.  In earlier years also, I have brought to your kind notice the disastrous consequences of such ban, on cotton farmers of Gujarat.  Last year alone, Gujarat farmers incurred a loss of Rs. 14,000 crore due to the export ban on cotton,” Modi noted in the letter.

Read the full text of the letter below

Detailing the market conditions, the chief minister noted that this year India had produced the maximum cotton crop with an initial estimate of 365 lakh bales. Gujarat farmers have increased their production from 98 lakh bales last year to 116 lakh bales this year and are expected to deliver a minimum of 124 lakh bales next year. But, cotton prices have gone down in Gujarat from Rs 62,000 per candy last year to Rs. 34,000-38,000 per candy this year. The ban comes right when the prices were slowly picking up.

“It is against this background that the centre has imposed the sudden ban of cotton exports. This will have a major impact on the cotton farmers of Gujarat and the agricultural economy of this state,” said Modi.

“It is my request that the ban on the cotton export should be immediately lifted. Alternatively, Shankar variety of cotton of Gujarat should be kept out of the export ban as it is more acceptable in the international market,” he said.

Here is the full text of the letter

March 05, 2012.

Respected Pradhanmantri ji,                                                                              

I was shocked to learn the immediate ban imposed by the Government of India on Cotton export today.  In earlier years also, I have brought to your kind notice the disastrous consequences of such ban, on Cotton farmers of Gujarat.  Last year alone, Gujarat farmers incurred a loss of Rs. 14,000 Cr. due to the export ban on cotton.

This year India has produced maximum cotton with an initial estimate of 365 lac bales.  Gujarat farmers have increased their production from 98 lac bales last year to 116 lac bales this year.  It is expected that Gujarat farmers will produce a minimum of 124 lac bales next year.  Gujarat has worked a decade, to develop and improve  the quality of  cotton for export quality.  Today, the Shankar variety of the cotton is the best accepted Indian Cotton in International markets and it can compete with any other variety of international cotton.  Prices of cotton has reduced in Gujarat from Rs. 62000 per candy last year to Rs. 34000-38000 per candy this year.   The prices were slowly picking up.  It is against this back-ground that the Centre has imposed the sudden ban of Cotton exports. This will have major impact on the cotton farmers of Gujarat and agricultural economy of this State.

Textile mills and Yarn manufacturers were to have a minimum stock of 52 lac bales of cotton.  The present stock available with them as on today is only 27 lac bales as they have not been purchasing cotton through out the year.  Now, they want to buy Cotton at prices lower than the Minimum Support Prices through the export ban by Central Government which will artificially bring down the cotton prices and create a panic among farmers. This strategy by the industry is open for speculative manipulation in the market.  Last year, when the ban was introduced China released their stocks of cotton into international market at higher prices leading to a wind-fall profit.  Actually, this benefit should have gone to Indian farmers.

The Government has put restriction on the export against Registration Certificates already issued, which have permanently damaged the reputation of the country in the international market.  It will also have long-term impact on the growing of cotton by the farmers especially in Gujarat.   Giving benefit to Textile industry should  not be at the cost of Gujarat farmers who have already contracted substantial quantity of quality cotton for export.

It is my request that the ban on the cotton export should be immediately lifted. Alternatively,  Shankar variety of cotton of Gujarat should be kept out of the export ban as it is more acceptable in the international market.

With warm regards,

[Narendra Modi]