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CAI urges Indian govt to withdraw import duty on cotton

Jun '21
Pic: Shutterstock
Pic: Shutterstock
Cotton Association of India (CAI) has reiterated its request to the Government to withdraw 10 per cent customs duty imposed on cotton since February 2, 2021. There is a shortfall of extra long staple (ELS) and non ELS contamination-free sustainable cotton due to the imposition of import duty, as India hardly produces these types of cotton.

For last several decades, cotton has been under Open General License (OGL) scheme without any quantitative and qualitative restrictions.

"India produces merely 5 to 6 lakh bales of ELS cotton against our actual requirement of about 12 to 15 lakh bales of ELS and about 5 to 7 lakh bales of non ELS contamination-free sustainable cotton. India hardly produces this type of cotton and there is a clear shortfall of the same. India requires such ELS and contamination-free sustainable cotton not produced in our country to cater to the international demand," CAI president Atul S Ganatra said in a letter addressed to finance minister Nirmala Sitharaman.

"Due to the imposition of 10 per cent import duty on cotton, this raw material, which is being imported in India, has become costly thus reducing our competitiveness vis-à-vis other countries like China, Bangladesh, Pakistan and Vietnam," Ganatra said in the letter.

Moreover, prices of ELS cotton in India are very high between ₹8,500 to ₹9,000 per quintal, which is higher by about ₹2,500 per quintal, i.e. about 30 per cent higher than the Minimum Support Price (MSP). Therefore, the interest of the farmers will not be impacted adversely by removal of 10% import duty on cotton.

"We, at Cotton Association of India, firmly believe in free trade policy both for export and import of cotton and support no duties to be levied," the letter stated.

Emphasising on the urgent need for withdrawal of import duty, Ganatra said if the import duty is not removed, domestic prices will go up further and create more hardship to the domestic textile sector viz. spinning, weaving and garment industry.

"The 10 per cent import duty levied on cotton is not in the interest of the nation as it does more harm than good and interest of our domestic textile industry would be served better if 10 per cent import duty levied on cotton is withdrawn immediately," Ganatra concluded.

Fibre2Fashion News Desk (RKS)

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