Indian firms begin cotton imports after duty scrap

MUMBAI - Indian firms have contracted imports of 50,000-60,000 bales of cotton in the week to Tuesday after the government set in motion steps to boost domestic supplies, a senior industry official said on Wednesday.

Last Wednesday India scrapped import duty on raw cotton and withdrew export incentives to boost supplies and tame high prices.

"Some import contracts have been made," said P.D. Patodia, chairman of the Confederation of Indian Textile Industry (CITI).

"About 50,000-60,000 bales may have been contracted for imports after the duties were scrapped."

The contracts were mostly for West African cotton done at about 78 cents to 79 cents per pound, said Sandip Jain, a Ahmedabad-based cotton buyer and exporter.

Government measures have helped in increasing supplies and easing prices, Jain said.

"Cotton meant for exports are now being sold in the local markets, which has improved availability. Prices have also started to ease," said CITI's Patodia.

Prices of the popular Shankar variety, which touched a record 28,000 rupees per candy in Gujarat in early July, have eased to 27,000 rupees.

India's cotton exports are likely to touch new highs in the year ending September 2008, which has led to a spike in local prices by almost 35 percent.

Cotton exports may rise 72 percent to touch 10 million bales in the year ending September 2008 compared to a year ago, a senior government officials had said on Tuesday.

On Tuesday a senior official in ministry of textiles said more measures, such as duty on cotton exports or quantitative restrictions, may be considered to increase supplies.

(1 bale=170 kg)