Cotton industry operating below capacity, wants import duty junked

As big farmers and small trade aggregators hoard cotton expecting return of the historically high prices of the previous year, the cotton-based industry continues to operate below its capacity, seeking the removal of import duty. However, a section of the industry thinks that allowing imports may hurt farmers’ sentiments at a time when the industry is facing a cotton crunch.

“Cotton arrivals are short by about 30-40% than normal. We are unable to meet our requirements through imports due to the import duty on cotton. Currently, Indian cotton prices are higher than the global prices by about 10-12%, while the foreign buyers of Indian cotton textile, garments and yarn are quoting lower prices. We have requested the central government to consider removing import duty on cotton," said Ravi Sam, chairman, the Southern India Mills Association (SIMA).

Export orders have declined due to the higher inventories stocked by buyers to cover the shortages of the covid period. Recession fears have also impacted buying interest for Indian textile and yarn. However, exporters say that they have buyers at competitive lower rates. “We are getting trade inquiries, which we will decline to reduce losses,” said Ravi Sam.

Prices of raw unprocessed cotton, also called as kapas, have fallen by 15% to 20% in the ongoing cotton season from Rs 9,500-10,000 per quintal to Rs 8,000-8,500 per quintal.