COTTON EXPORT

QUOTAS ON SALE
With global prices higher than at home, the
limited allocations are commanding a premium
KALPESH DAMOR &
RUTAM VORA
Ahmedabad, 24 January

otton quotas allot-

C ted to various ex-

porters by the Di-
rector General of
Foreign Trade
(DGFT) are on sale in Gujarat,
the biggest producing and trad-
ing state in the commodity.
As quotas were allotted to
some with no prior experience
in cotton exports, many of them
are now offering their quotas to
serious players at a premium or
on a profit sharing basis. Out of 928 applicants (and 1.9 million bales) allotted quotas
The situation is somewhat for exports, 672 got permission to export only 500 bales
similar to the grey market in
the Initial Public Offering of like share trading, where you dition for people seeking the
shares. Retail investors sell pay a premium to buy shares in export permit. Apart from se-
their application forms or al- the grey market,” he said, re- rious players, many non-tra-
lotted shares to operators, questing anonymity. ditional exporters applied and
for a charge. In the case of cot- got the quota allocation. These
ton, it is the quota allocated to ‘Want my quota?’ included individuals, cotton
applicants that are on sale. Echoing similar sentiments, S testing laboratories, SMS serv-
Of 928 applicants (and 1.9 Stalekar, vice-president, cotton ice providers, companies en-
million bales) allotted a quota division, Sagar Group of En- gaged in solar energy solutions,
(on January 10) for exports, 672 terprises, said: “Taking bene- chemicals and other agricul-
got permission to export only fit of the situation, non-tradi- ture commodities.
500 bales (a bale is 170 kg). An- tional exporters charge a pre- Marketmen alleged the al-
other 31 applications were al- mium anywhere in the range of location was improper in the
lotted above 10,000 bales. It was 2.5-10 per cent of the total val- sense that many non-tradition-
in the interest of quota holders ue of export.” al exporters got significant quo-
and traditional exporters to com- “Those who do not have any tas, while some regular cotton
bine the lots and export, to save experience or expertise in the exporting companies got less.
costs. A 10-15 per cent mar- cotton export market are now The rush for the permits was
gin in exports made such shar- approaching serious players because international cotton
ing attractive. with offers to execute cotton prices are higher than domes-
A trader in Ahmedabad con- quantities allocated to them. tic prices, offering certain prof-
firmed being approached by one Even if they are paid 40 per cent its. “The international prices are
such individual. “We have been of the margin, it is still lucrative, higher by 20-25 cents per pound,
contacted by an individual who as margins are as high as `4,000 which has opened the avenue
offered us his quota of 500 bales per candy (356 kg),” said Arun for huge profits for a normal ex-
for export to Pakistan. Sur- Dalal, owner of the Ahmedabad- porter, too,” said an Ahmedabad-
prisingly, he wasn’t even aware based leading cotton trading based cotton trader.
about the prevailing prices of firm. Cotton prices are 170-174
cotton. He demanded 146 cents To make the licensing pol- cents per pound in the inter-
per pound for the lot, around icy simple and transparent, national market, and 147-150
seven per cent higher than our DGFT had not included ‘’pri- cents per pound in the do-
actual costing. This has become or experience’’ as a pre-con- mestic market.