Indian industry appeals to govt to allow duty-free import of cotton

Goyal also holds the portfolio of commerce and industry, consumer affairs and food and public distribution.

The delegation apprised the minister about the shortage of quality cotton that the industry is facing now on the backdrop of declining domestic cotton production during the current cotton season (around 340 lakh bales of 170 kgs each as against 360-370 lakh bales production in the previous years) and the increased demand for cotton (360 lakh bales as against 300 to 320 lakh bales in the previous years).

Levying 11 per cent import duty on cotton is affecting global competitiveness of the Indian textile and clothing industry as cotton traders are adopting an import parity pricing policy, it said.

From January this year, Indian cotton’s price is at ₹15 to ₹20 per kg higher than the international price. Therefore, the industry is compelled to import high quality extra-long-staple cotton, sustainable cotton, and contamination free cotton by paying 11 per cent duty to meet export commitments, whereas competing countries enjoy the advantage of duty-free import of cotton, the delegation said.

These developments have resulted in the cancellation of export orders and diversion of the same to Bangladesh, Vietnam, China and Pakistan by importers in the European Union, the United States and Japan, according to a press release from NCTC.

India’s share in US bedlinen exports has declined from an average of 55 per cent during 2021 to 44.85 per cent in January 2022. While Pakistan’s share has increased to 25.71 per cent from 20 per cent and China’s share has increased to 19.37 per cent from 12 per cent during the same period. 

Micro, small and medium enterprises, including handloom, power loom, independent knitting, weaving, processing, and made-up segments that account for over 80 per cent of the exports, have no access to advance authorisation scheme and duty-free import of cotton. These are the worst affected segments and their capacity utilisation has already dwindled down to below 70 per cent, resulting in huge job losses and a declining trend in the goods and services tax (GST) revenue, the delegation noted.

The delegation feels duty-free imports may not exceed 40 lakh bales during this season. Moreover, it will take three to four months for the imported cotton to reach Indian textile mills.  As the cotton farmers have already sold their cotton crop of present season and are preparing for sowing for the next season, allowing duty-free import of cotton will not at all affect the Indian cotton farmers, the delegation added.

The delegation consisted of T Rajkumar, chairman of the Confederation of Indian Textile Industry (CITI); Narendra Goenka, chairman of the Apparel Export Promotion Council (AEPC); Manoj Patodia, chairman of the Cotton Textiles Export Promotion Council (TEXPROCIL); Ravi Sam, chairman of the Southern India Mills’ Association (SIMA); and Raja M Shanmugham, president of the Tirupur Exporters Association (TEA).

The total textiles and clothing export is estimated to have increased from $29.454 billion to $39.734 billion and recorded a growth of 67 per cent in fiscal 2021-22 in comparison to the previous year. Similarly, India’s cotton textile export is also estimated to have witnessed a growth of 56 per cent by reaching $15.056 billion. 

Fibre2Fashion News Desk (DS)