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SIMA appeals to Indian finance minister to withdraw cotton import duty
15 Jun '21
2 min read
Pic: Shutterstock
Southern India Mills’ Association (SIMA) chairman Ashwin Chandran recently requested finance minister Nirmala Sitharaman to withdraw both the basic customs duty (BCD) and the agriculture infrastructure development cess (AIDC) levied on cotton to create a level-playing field on the raw material front for the Indian textile and apparel industry.
The announcement of 5 per cent BCD and 5 per cent AIDC with applicable cess on the import of cotton in the 2021-22 budget has a severe detrimental impact on the value-added segments and erodes the competitiveness of the country’s garments and home textile exporters, SIMA said.
The import duty will not benefit Indian cotton farmers owing to the negligible volume of imports and the non-availability of such speciality cotton varieties in India, SIMA said.
“The levy of these import duties is a major blow to the Indian cotton textiles industry, which was just recovering from the losses suffered during the pandemic and lockdowns last year,” Chandran wrote.
A similar import duty of 10 per cent BCD, 4 per cent additional customs duty and 3 per cent education cess imposed during 2007-08 had a severe impact on Indian spinning industry, and the government withdrew that after understanding the ill effects, Chandran wrote.
Bt technology covers over 95 per cent of the area under cotton and has made India a cotton surplus country, but only in the medium and long staple cotton varieties, SIMA said.
For extra-long staple (ELS), contamination-free and sustainable cotton, the industry depends on imports to produce high value-added products. The import of such cotton accounts for only 4 per cent of the annual cotton requirement in India, SIMA said.
He said it has taken over a decade for the Indian textile industry to build up the market share in these segments, and with the levy of cotton import duty, India will lose its competitiveness and market share to rivals like Bangladesh, Sri Lanka, Pakistan and Vietnam.
The announcement of 5 per cent BCD and 5 per cent AIDC with applicable cess on the import of cotton in the 2021-22 budget has a severe detrimental impact on the value-added segments and erodes the competitiveness of the country’s garments and home textile exporters, SIMA said.
The import duty will not benefit Indian cotton farmers owing to the negligible volume of imports and the non-availability of such speciality cotton varieties in India, SIMA said.
“The levy of these import duties is a major blow to the Indian cotton textiles industry, which was just recovering from the losses suffered during the pandemic and lockdowns last year,” Chandran wrote.
A similar import duty of 10 per cent BCD, 4 per cent additional customs duty and 3 per cent education cess imposed during 2007-08 had a severe impact on Indian spinning industry, and the government withdrew that after understanding the ill effects, Chandran wrote.
Bt technology covers over 95 per cent of the area under cotton and has made India a cotton surplus country, but only in the medium and long staple cotton varieties, SIMA said.
For extra-long staple (ELS), contamination-free and sustainable cotton, the industry depends on imports to produce high value-added products. The import of such cotton accounts for only 4 per cent of the annual cotton requirement in India, SIMA said.
He said it has taken over a decade for the Indian textile industry to build up the market share in these segments, and with the levy of cotton import duty, India will lose its competitiveness and market share to rivals like Bangladesh, Sri Lanka, Pakistan and Vietnam.
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