Industry wants the government to lower the import tariff on cotton
05 January 2022, Mumbai:
The Southern India Mills' Association (SIMA) and the Confederation of Indian Textile Industry (CITI) have requested the government to reduce import duties on cotton.
Cotton imports are subject to a duty of 5% BCD (Basic Cotton Duty), 5% AIDC (Agriculture Infrastructure and Development Cess), and 10% social welfare cess, for a total of 11%. Cotton should also be removed from the MCX and NCDEX, according to them. The cotton industry has said time and time again that just 4 to 5% of the cotton utilised by the industry is imported.
When there is a scarcity or the domestic cotton price is substantially higher than the international price, the industry may choose for imports solely during the off-season.
As a result, the industry was on an even footing. As a result, the elimination of the 11% import charge on cotton and cotton waste will have no impact on Indian cotton producers.
The Indian cotton textile sector has always had a home-produced cotton edge, according to Ravi Sam, Chairman of SIMA, because cotton was cheaper by 5% to 10% throughout the cotton season (December to March) and remained globally competitive.
He also stated that the price of seed cotton began to rise at the start of the season. The average price of Gujarat Shankar-6 cotton has risen from Rs.6,788 per quintal on 1 October 2021 to Rs.8,930, while the price of excellent grade kapas has risen from Rs.7,575 to Rs.10,760 per quintal.
He claims that the New York Features price has always been higher than the Indian cotton price, and that, for the first time, the Indian cotton price is currently higher than the international cotton price as a result of the imposition of import duties, which has harmed exporters' competitiveness.
For the past two months, the price of Indian cotton per kg has increased by Rs.10 to Rs.15 per kg, and the situation is expected to worsen. Exporters are unable to finalise export orders that usually firm up in December-January, and orders are moving to competitive countries.
He has warned that if the import tariff on cotton is not abolished soon, the cotton textile value chain might come to a standstill in the coming months. The market is additionally aggravated by the MCX and NCDEX characteristics.
According to T.Rajkumar, Chairman of the CITI, increasing rainfall during cotton plucking time has had a significant impact on cotton quality, resulting in a severe scarcity of excellent grade cotton for Indian exporters.
He claims that the Rd value, or cotton brightness indicator, is about 65 this season, compared to over 70 in previous seasons.
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