NEW DELHI, March 13 (BSS/AFP) - India yesterday formally reversed a ban on cotton exports one week after the policy announcement was greeted with fury from growers, but said it needed to review planned shipments.
The government of India, the world's second-largest producer of cotton, unexpectedly banned all exports of the crop last week, saying it wanted to protect supplies for domestic mills.
But Prime Minister Manmohan Singh ordered a rapid review of the decision after it provoked outrage from farming groups, complaints by China -- India's largest cotton customer -- and protests by the agriculture minister, who said he knew nothing about the move before it was unveiled.
"The ban stands lifted," Commerce Secretary Rahul Khullar said, in a move that traders say will increase supplies in an already oversupplied global market, and put downward pressure on international prices.
But Khullar said existing export permits "would be scrutinised and revalidated."
No new export registrations could be made until the existing permits are revalidated to make sure there are "no fictitious transactions," he said.
Of the total registrations of 13 million bales before the ban, some 3.5 million bales are yet to be shipped and these would be scrutinised by the commerce and textile ministries, he said.
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.
Khullar said that the country has already shipped 9.5 million bales in the first five months of 2011-12 marketing year that runs from October to September -- an all-time high.
The latest reversal comes after a series of policy setbacks for the government, including the U-turn in December on major reforms in the retail sector -- a move widely seen as an embarrassment for Premier Manmohan Singh.
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.