Import duty on cotton affecting global competitiveness of Indian firms: SIMA

CHENNAI: The Southern India Mills Association (SIMA) has urged the Centre to withdraw the cotton import duty, saying it is severely affecting the global competitiveness of the Indian textile and clothing industry.SIMA chairman Aswin Chandran said the announcement on levying 5 per cent BCD (Basic Cotton Duty) and 5 per cent AIDC (Agriculture Infrastructure and Development Cess) with applicable cess on the import of cotton in the Budget 2021-22 came as a major blow to the Indian cotton textiles industry.

Chandran sought withdrawal of both the BCD and AIDC to create a level playing field on the raw material front for the industry. Similar import duty policy intervention of 10 per cent customs duty, 4 per cent additional customs duty and 3 per cent education cess had a severe impact on the spinning industry, and after understanding its ill-effects, it was withdrawn, he pointed out.

The association said import duty on raw cotton would erode the competitiveness of value-added segments that have a business size of about Rs 50,000 crore in exports and Rs 25,000 crore in the domestic market. These segments provide jobs to about 12 lakh people. “It has taken over a decade for the textile industry to build up the market share in these segments, and with the import duty, we will lose our competitiveness and market share to competing countries,” said

Chandran. He further stated the government might receive about Rs 360 crore per annum as additional revenue on account of the import duty, but will in turn imperil annual GST revenues of around Rs 1,800 crore. More importantly, the import duty will not benefit Indian cotton farmers owing to negligible volume of imports.