“Both the basic customs duty and agriculture infrastructure development cess levied on cotton should be withdrawn to create a level playing field on the raw material front for the Indian textile and clothing industry. The import duty on raw cotton would erode the competitiveness of the value-added segments that has a business size of around Rs 50,000 crores in exports and Rs 25,000 crores in the domestic market. These segments provide jobs to around 12 lakh people,” said Ashwin Chandran, chairman, The Southern India Mills Association (SIMA) in a statement.

The government might receive around Rs 360 crores per annum as additional revenue on account of the import duty on cotton, but will in turn imperil annual GST revenues of around Rs 1,800 crores.

“More importantly, the import duty will not benefit the Indian cotton farmers owing to the negligible volume of imports and the non-availability of such specialty cottons in India at the moment. Since the Indian textiles and clothing exporters are predominantly MSMEs, it is practically impossible for them to avail duty exemption under the Advance Authorization Scheme,” he added.

None of the countries in the textile trade, including major competitors like China, Bangladesh, Pakistan, Vietnam and Sri Lanka, levy import duty on cotton. Hence, steps should be taken to withdraw the import duty on a war footing to enable the ailing Indian cotton textile industry to sustain its global competitiveness and achieve a sustained growth rate in the post-COVID period, urged SIMA.