New Delhi: The government on Monday banned the export of cotton amid fears that its prices will shoot up on account of declining production in the current season.
"Export of cotton has been prohibited till further orders," the Directorate General of Foreign Trade (DGFT) said in a notification.
Exports against registration certificates already issued will not be allowed either, it said.
A US Department of Agriculture (USDA) report has lowered India's cotton production estimates by about 7.5 lakh bales to 342.5 lakh bales during the current marketing year (October-September).
In 2010-11, India's cotton production was 33 million (330 lakh) bales.
The forecast has been downsized due to an estimated lower production in Maharashtra, where weather conditions have been less than favourable for the crop's growth.
As of January 15, arrivals stood at 13.52 million bales, as against 16.12 million bales in the year-ago period.
State-owned Cotton Corporation of India has said that cotton exporters and domestic mills are making brisk purchases to meet their immediate as well as lean season requirement of the fibre amid concerns of a fall in production and expectations of a pick-up in demand from the yarn industry.
The poor quality of the present cotton crop, a rise in demand for yarn and reports of lower production are compelling exporters and domestic players to hike their purchases.
India, the world's second-largest cotton producer, has already exported 85 lakh bales as against 70 lakh bales last year.
Textile mills consumption estimate has been revised up to 216 lakh bales for the current season from 210 lakh bales.
Cotton prices in the domestic market are hovering at about Rs 34,000-35,000 per candy (356 kg each). In March 2011, the prices hit Rs 61,000 per candy.