The Indian textiles industry has received the much-awaited respite as the government has removed the nearly 11 percent customs duty and cess on import of cotton. However, the decision is unlikely to result in imports of 40 lakh bales of 170 kg each—the estimated shortfall by the industry. Instead, the industry may import only 10-12 lakh bales more. Industry organisations said that the government delayed the decision (on removing import duty) which will limit quantity of cotton imports. However, the decision has been welcomed by textile industry bodies as it will ensure better availability of raw material in the coming months.
Tiruppur Exporters’ Association (TEA) President Raja M Shanmugham told that it is a very good decision by the government. “The decision intends to handhold the farmers and industry equally. It is likely that removal of duty will control price rise of cotton which will help the entire value chain and all the stakeholders.”
The Cotton Textiles Export Promotion Council (Texprocil) Executive Director Siddharth Rajgopal welcomed the government decision to remove import duty on cotton and said that it will ensure level playing field between textile exporting countries. “Indian exporters were facing difficulty in getting orders because Bangladeshi and Vietnamese exporters were able to offer lower prices. Current higher cotton prices may be unviable for import in India, but the increase in cost will be uniform for all the importing countries.”
TT Industries Limited’s Managing Director Sanjay K Jain said that it was a good decision by the government, which was delayed by 2 months. “Cotton prices are unlikely to come down, but availability will be ensured.” He said that the government needs to take more stronger short-term measures like stock disclosure, tightening MCX trading norms and give strong signals to stockiest against hoarding because it is now a matter of survival of MSMEs and their workers, plus cotton garments has gone out of reach of the general consumer.
On the quantity of cotton import, Jain said that due to the delayed decision, there will be limited window for imports. It is unlikely to see import of 40 lakh bales as per estimate of shortfall given by the industry earlier. He said that hardly 10-12 lakh bales cotton can be imported till September 2022. “It will be possible only when global prices come down to below Indian prices.”
Earlier, the Cotton Association of India (CAI) had said that up to March 31, 2022, about 6 lakh bales are estimated to have arrived at Indian ports. The estimate of cotton imports into India was maintained at 15 lakh bales of 170 kg each by the CAI. But total import will now be higher due to the duty cut. CAI had estimated India’s total cotton exports at 45 lakh bales for the current cotton marketing season ending on September 30.
