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Cotton industry faces a real challenge
Feb '08
A plea has been made to the Finance Ministery for reducing import duty to 5 percent and remove additional customs duty of 4 percent on cotton.

The petition was placed by the textile industry that was anxious over the declining competitiveness of cotton growers and yarn manufacturers in the global market. This apart, it has urged the banks to bring down the rate of margin money charged for funding purchase of cotton from the present 25 to 10 percent.

The concessions have been demanded on grounds that India has emerged as a major exporter of raw cotton for the past three years and is facing stiff competition from China.

Exports have amounted to 55 lakh bales and it is further expected to cross 65 lakh bales this year.

A growing concern, however, has been the cost of cotton transportation. Intra-state conveyance charge is higher when compared to the expense borne during exports to China. This is ultimately making cotton cheaper for the country's biggest competitor and that too, through its own supply.

Although, the area under quality cotton cultivation has been increased, it will not have any positive effect on the industry since most of it is being exported to China. Around 75 percent of India's estimated production of cotton bales in the current cotton year is likely to get exported to China.

In spite of this, export of cotton to China cannot be prohibited because of the interests of the farmers. It can be reduced nonetheless.

Thus, cotton industry of India needs to take serious measures to ensure that its interests are well taken care of by the Government.

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Courtesy: India ITME

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