Textile industry has urged the Indian government to exempt cotton from 11 per cent import duty. Three years ago, the Indian government imposed the duty on cotton imports, which was reasonable at the time as Indian cotton was cheaper compared to cotton from other countries. However, the situation has since reversed, with Indian cotton now around 18-19 per cent more expensive than global prices.

Although cotton prices may not skyrocket during the off-peak season (April-September), the Indian textile industry is struggling in the export market due to the high cost of cotton. This is why the Southern India Mills Association (SIMA) has called for the removal of duties at least for the current off-peak season.

Market price data analysis shows that the ICE cotton May 2023 contract is trading at US cent 84.19 per pound, which is approximately ₹152.22 per kg. Meanwhile, the MCX cotton June 2023 contract was traded at ₹64,440 per candy of 356 kg (₹181 per kg) on Wednesday. Indian cotton is currently 19 per cent more expensive than ICE cotton.

Normally, Indian cotton gets a premium of 5-7 per cent over ICE cotton due to its better specifications. However, the current price disparity is due to other market dynamics. Spot cotton prices in Gujarat were noted at around ₹62,800-63,200 per candy.

Ravi Sam, chairman of SIMA, has appealed to Nirmala Sitharaman, Union minister of finance, to exempt cotton from import duty during the off-season (April to October). Last year, the government had taken this step to ensure raw material security, avoid production stoppages, and prevent a decline in exports. Sam argued that with this import duty, Indian cotton has become expensive, resulting in the loss of several export orders. He stated that cotton textile exports have dropped over 23 per cent compared to the previous year, making it essential to make cotton available to the manufacturing sector at an internationally competitive price. He emphasised that duty exemption is essential to revive export performance.

Sam further pointed out that although the increased cotton price due to import duty has supported farmers to some extent, it has greatly benefitted traders and multinational corporations. As a result, the competitiveness of the Indian cotton textile value chain, which exports almost two-thirds of the cotton produced in the country as value-added textile products, has been completely eroded.

Fibre2Fashion News Desk (KUL)

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Exempt cotton from 11% import duty: Textile sector tells Indian govt

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