Cotton import duties may soon be abolished

23 January 2022, Mumbai:

The textile and clothing industries, which are grappling with the increasing price of cotton and cotton yarn, may soon find some relief. Apparel Resources learned from industry insiders that the cotton import charge might be eliminated in the coming days.

Cotton is subject to an import tariff of 11%. "We have received favorable indications in this respect from the Ministry of Textiles (MoT), and we are hoping that an announcement will be made shortly," said a senior official of a cotton industry group.

He went on to say that Indian cotton farmers are getting a decent price for their crop, so removing the tariff shouldn't be a huge deal. In the 2021-22 budget, the government introduced a fee of 5% basic customs duty, 5% Agricultural Infrastructure Development cess, and 10% social welfare cess on both, totaling 11% on cotton imports.

Various stakeholders in the garment business are constantly voicing this problem, and strikes have occurred in Tirupur as well. On the same subject, the industry is on hunger strike even today. The Ministry of Transportation has already had many talks with various trade associations and has even issued a warning to stakeholders about the impending rises.

The Tamil Nadu Chief Minister has also advocated the removal of the cotton tariff and has written to the Ministry of Textiles thrice about the problem. Cotton imports would undoubtedly grow if the government abolishes the tariff, but this will be contingent on the price of imported cotton, as high cotton prices are a global phenomena.

If the levy is lifted, industry analysts estimate that India would be able to import roughly 20-25 lakh bales of cotton. According to Statista, India imported raw cotton and cotton wastes worth around Rs. 28 billion in fiscal year 2021, a considerable decrease from FY2020, when the same was worth Rs. 93 billion.

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