I have tried to put my comments on this subject when recently India bans cotton exports—confusing everyone, including our own government. I am not an expert on this issue but I recalled one of the issue from the Business world towards the end of 2004 have the lead story on The Rising Indian Textile Industry – The End of quota Regime. It was expected that t China will be the biggest beneficiary of No Quota regime and China would garner 50% of exports market. The other beneficiary was India as it was expected as Indian players can handle small orders which will not be possible in China. Also, China lacks innovation. India’s advantages come from three main sources its quota utilization trend in the past, market exploitation rate after third level of integration and critical export mass.
The reason every one was gung-ho over India as we are – the world’s second biggest cotton producer after US. But there is a wide area of study how well we have handled the sector time and gain there have been ban put on , lifted up by the agricultural ministry or by the commerce ministry and the situation of the farmers in Vidarba (India’s cotton belt) remains the same in fact the farmers suicide rate has increased yesterday quoted by one of the financial daily.
An interesting point came when the decision on March 5 was taken by commerce ministry Trying to keep prices low favours textile makers but is bad for farmers who grow the stuff. India’s agriculture minister says he was not consulted about the ban. Narendra Modi, the powerful chief minister of Gujarat, a state in west India, wrote to the prime minister, Manmohan Singh, that the ban was anti-farmer. Mr Singh has promised an immediate review.
All this may damage to India’s reputation as a reliable supplier.
Caveat emptor : I am not the subject matter expert on the above