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Indian govt relaxes cabotage rule for cotton transport
May '18
Indian govt relaxes cabotage rule for cotton transport
The Government of India has relaxed cabotage rules for transportation of cotton, wool, and vegetable textile fibres such as flax, hemp and jute. With immediate effect, foreign flag vessels would be able to transport such items from ports in Gujarat to Tamil Nadu at a competitive rate, benefitting cotton farmers in Gujarat and spinning mills in Tamil Nadu.
The ministry of shipping has issued a notification announcing relaxation under Section 406 of the Merchant Shipping Act, 1958, for coastal movement of agriculture, horticulture, fisheries and animal husbandry commodities. The list of commodities under this relaxation include items with 4-digit HS codes of 5101 to 5105, 5201 to 5203, and 5301 to 5305.
Explaining the benefit of the relaxation, The Southern India Mills’ Association (SIMA) chairman P Nataraj said, “At present, the average cotton transportation cost between Gujarat (the largest cotton producing state in India) and China for a 40-foot container having a capacity of 170 cotton bales each weighing 170 kg works out to less than ₹100 per bale. In comparison, the by-road freight per bale between Gujarat ginning factory and spinning mills in Tamil Nadu go up to ₹1,000 per bale during the peak season.”
“The transportation cost for imported cotton from countries in West Africa to the spinning mills in Tamil Nadu was ruling around ₹400 per bale,” he added.
Due to the new relaxation, a container ship from another country would be able to ferry cotton and other goods, port to port, along coastal routes. “The foreign flag vessels might be in a position to offer a competitive rate as large number of empty foreign containers being transported between the ports in Gujarat and Tamil Nadu and also the tax benefits extended for foreign flag vessels,” said Nataraj.
He thanked the Prime Minister, the ministry of shipping and the ministry of textiles for considering the long pending demand and relaxing the cabotage rule for cotton transport. He said that the initiative would greatly benefit lakhs of cotton farmers in Gujarat and the spinning mills in Tamil Nadu.
Cotton grown in Gujarat has the most preferred fibre quality parameters that knitted garment producers in Tiruppur cluster seek. Every season, Tamil Nadu spinning mills consume around 50 lakh bales of cotton grown in Gujarat. (RKS)

Fibre2Fashion News Desk – India

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