New Delhi: Expressing dismay over India's decision to ban cotton exports, the International Cotton Association (ICA) Wednesday said the move will have "serious consequences" on world cotton trade.
The government on March 5 has banned exports of cotton.
"As the second largest producer and consumer of cotton in the world, with a world market share of about 20 percent and one of the largest exporters of global cotton, the ICA believes that the actions taken by India will have serious consequences and a major, detrimental impact on world cotton trade," the ICA said in a statement.
The international cotton trade association claims that the suspension of registration of cotton export contracts in 2010 by India has led to numerous arbitrations at the ICA, as many firms, including from India, were unable to execute their contracts.
It said that the ramifications of the 2010 ban led to a huge disruption of trade, with many firms having to pay out large sums of money as a consequence of arbitration awards against them.
"...the current ban will produce the same results and, once again, undermine India as a reliable trading partner," it said, adding the ban has already sparked an up move in New York Futures cotton prices.
The association said that the impact of this ban may be more severe, as it includes registered contracts.
"Customers in many importing countries who are counting on this cotton to run their spinning mills will suffer irreparable loss and damages," it added.
ICA has urged the Indian Minister of Commerce and Industry to immediately reconsider its policy and revoke the ban with immediate effect to enable international contracts to be executed without further defaults and reputational damage.
The UK-based association operates on a not-for-profit basis.