Vaghela reaffirms Govt plan to slash cotton import duty

08 Jul '08

2 min read

Gopal Pillai, Commerce Secretary for the Government recently stated that the Government, against the wishes of the textile ministry, has neither plans of reducing import duty on cotton nor banning of its exports.

Commerce Secretary sounded univocal when he asserted that presently there is a 10 percent customs duty and four percent import tax on cotton and these were not likely to be amended in the near future. He also ruled out any plans of banning cotton exports especially since the domestic prices for the raw material were ruling higher than those in the international market.

However, contradicting this view, Mr Shankarsinh Vaghela, Union Textile Minister, told the media yesterday, that the Government was indeed considering a slash in import duty on cotton. “The proposal came to us directly from the prime minister's office and the finance ministry. We need to ensure that mills in India are not deprived of raw material. Similarly, we should also ensure that Indian cotton growers also benefit from rising global demand and they should not be subject to an export duty to deprive them from getting better realizations.”

While global production of cotton is declining from about 26.6 million tons to about 25.4 million tons, demand is actually on the rise and has already hit 27 million tons. It is because of this predicament that there has been a tightening in supplies and increase in prices making the problem a global one.

Nonetheless, Mr Vaghela anticipates a 20 percent growth in textile exports this fiscal from US $20.9 billion of 2007-08. During to January to June this year, textile exports to US have grown by 4.8 percent while to the EU it has surged by about 5 percent.

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