The government yesteday announcerd the withdrawal incentives for export of cotton yarn as a part of series of measures to moderate commodity prices in the domestic market.
The measure comes just a day after the textile ministry tightened the rules, virtually stopping the export of raw cotton in the wake of a sharp increase in domestic prices.
"Export of cotton yarn ... shall not be entitled for DEPB (Duty Entitlement Pass Book) benefit from immediate effect," the directorate general of foreign trade said in a circular.
Under the DEPB, duty paid on the imported contents of export consignment is refunded. With the withdrawal of the same, exporters would lose incentive between 5.6 per cent and 8.2 per cent.
Last week, the government had slapped export duty of Rs2,500 per tonne on raw cotton. Registration of cotton yarn exports was also made mandatory.
Within a fortnight of the meeting of senior ministers, including Pranab Mukherjee, Sharad Pawar, Anand Sharma and Dayanidhi Maran, the government has taken a series of measures to arrest the rising prices of cotton and yarn.
The textile minister also met the finance minister today again in the wake of reports that the revenue department is in process of finalising prohibitive duty on export of cotton yarn.
The price of Shankar-6, the most popular variety of cotton, has risen by about 14 per cent in the last six months and yarn prices have shot up by about 30 per cent in the last three months.