The Prime Minister's Economic Advisory Council (PMEAC) came heavily on the textiles ministry and cautioned that "abrupt" changes in the cotton export policy would hurt the interest of farmers and dent India's image as a dependable global cotton-supplier.

"The cotton year 2009-10 witnessed a number of abrupt policy action which introduced an element of uncertainty for the  stakeholders," PMEAC said.

"This is not desirable," the PMEAC said in its economic outlook for the current fiscal. A series of policy decisions were taken regarding cotton exports in April and May this year.

First a duty to curb exports was imposed, then registration of new export contracts was suspended and shipments were subjected to licence regime. "This would have an adverse impact on India's position as a reliable international supplier," the Council said. The export restrictions were imposed following a sharp rise in outward shipments of cotton and increase in domestic prices.

However, following protests from leading cotton producing states like Gujarat, the restrictions were relaxed in May.

The Council said that it was important to decide on the policy regime for the next year and accordingly fix an export target. "Policy makers must fix the target for exports based on the availability of cotton from domestic production, its use by industry and the required stocks at the end of the cotton season," the PMEAC said. It said that all the stakeholder ministries (like Textiles and Agriculture) should be involved in the exercise of fixing the export target.

The PMEAC further said that the current export duty of Rs 2,500 per tonne of cotton was far from being prohibitive. As global prices increased by 35.5 per cent between October 2009-May 2010, Indian's cotton exports increased from 35 lakh bales (170 kgs each) in 2008-09 to 73.5 lakh bales in 2009-10.