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India Reverses Cotton Export Ban

India on Sunday reversed its ban on cotton exports in a swift U-turn just six days after the policy announcement was greeted with outrage from farmers.

The government of India, the world's second-largest producer of cotton, unexpectedly banned all exports of the crop last Monday, saying it wanted to protect supplies for domestic mills.

But Prime Minister Manmohan Singh ordered a rapid review of the decision after fury from farming groups and complaints by the agriculture minister, who said he knew nothing about the move before it was unveiled.

"Keeping in view the facts, the interests of the farmers, interest of the industry, trade, a balanced view has been considered by the Group of Ministers to roll back the ban," Commerce Minister Anand Sharma said on Sunday.

Sharma added in a statement that the formal order to lift the ban would be issued on Monday.

The reversal comes after a series of policy setbacks for the government, including the withdrawal in December of major reforms in the retail sector -- a move that was widely seen as a public embarrassment for premier Singh.

Singh's Congress party-led government has struggled to push through its reform agenda over the last two years as it has been waylaid by corruption scandals, a parliamentary deadlock and slowing growth.

The elderly prime minister, 79, has been criticized as indecisive, and the Congress party fared poorly in recent mid-term state elections.

The export ban, which had taken immediate effect, sent cotton prices soaring on New York's commodity markets and had been expected to send buyers in China flocking to the U.S. market.

"The global markets will welcome the move and international price pressures will start to ease," Naveen Mathur, associate director of currencies and commodities at Mumbai's Angel Broking, told Agence France Presse.

Experts said India decided to stop exports last week because cotton exports overshot official estimates and the government felt the need to build up buffer stock.

When the ban was imposed on March 5, Agriculture Minister Sharad Pawar accused the commerce and textile ministries of keeping him "in the dark" over the decision.

Narendra Modi, chief minister of the cotton-producing western state of Gujarat and a leading member of the opposition Bharatiya Janata Party (BJP), was also highly critical.

Modi accused the government of "conspiring with yarn manufacturers and textile mills" to keep domestic prices down.

Workers in Gujarat's cotton yards on Sunday called off a strike after the government statement.

Dilip Patel, President of All Gujarat Cotton Ginners Association, said cotton prices in India had fallen sharply during the week but that workers' demands had now been met.

Delegates of cotton farmers from the states of Gujarat and Maharashtra also travelled to New Delhi to lobby the government to overturn the ban.

Officials at the textile ministry had said the ban was imposed after taking into account "the trend of domestic consumption and depletion of domestic availability".

India has already exported 8.5 million bales in the fiscal year ending March 31, more than the government's target of 8.4 million bales.

Six months ago India completely freed cotton export controls. It had banned cotton exports in April 2010 and lifted the ban in the same year.

Source: Agence France Presse


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