SIMA urges Centre to provide duty exemption for cotton amid shortage

The Centre had in 2021-22 imposed 11% import duty on cotton duty to protect the livelihood of Indian cotton farmers

As shortage of cotton continues, the South Indian Mills Association (SIMA) on Tuesday urged the Union Government to exempt cotton from 11 per cent duty from April to October to ensure raw material security, avoid mass production stoppage and depletion in exports.

In a statement, the SIMA said cotton textiles exports have dropped over 23 per cent when compared to the previous year and it is necessary that cotton is made available to the manufacturing sector at an internationally competitive price, while pitching for the duty exemption which will revive export performance.

The Centre had in 2021-22 imposed 11 per cent import duty on cotton duty to protect the livelihood of Indian cotton farmers, which led to rise in the price of domestic cotton due to import parity pricing policy adopted by the trade.

“Though the area under cotton has increased from 124 lakh hectares to 130 lakh hectares, the cotton crop for the current season is likely to be only around 320 lakh bales. The cotton price has dropped over 25 per cent compared to last year and over 40 per cent of the cotton is yet to arrive in the market,” SIMA President Ravi Sam said.

The farmers and traders are anticipating an increase in the price, leading to continuous shortage of cotton, Sam said, adding that the Centre should provide duty exemption for cotton.

“It would take three to four months’ time for the imported cotton to arrive at the mills premises and therefore it is essential to remove the import duty immediately to enable the mills to enter into import contracts,” he added.

He also said India’s cotton yarn exports decreased to 48.5 crore kgs during April 2022 to January 2023 as against 118.5 crore kgs exported during the same period in the previous year.