Centre rules out hike in raw silk duty

Union Finance Minister Pranab Mukherjee, in his latest communication to the Karnataka government, said there was a huge shortage of silk in the country and that the Centre had the responsibility of ensuring sufficient supply of silk to weavers and traders.

Rejecting the State farmers’ demand, he said Karnataka produced only 12,000 tonnes of raw silk against the requirement of 30 lakh tonnes per annum in the country. He said import duty reduction was intended at augmenting the availability of raw silk at a reasonable price, incentivising domestic value addition and rectifying the inverted duty structure on raw silk vis-a-vis the finished products of silk such as yarn fabric.

Mukherjee said the decision to reduce the import duty in the 2011 Budget was taken after considering Karnataka’s plea and the counter-appeal from traders and weavers.

The minister, in a separate letter to Union Corporate Affairs Minister M Veerappa Moily, said the Centre would monitor the situation on both the supply front and on the farmers’ side to ensure nobody was harmed by the Centre’s decision. However, Mukherjee did not give any assurance to Moily on his request to increase the import duty.

The reduction in import duty — from 30 per cent to five per cent effective from March 1, 2011 — has hit the State sericulturists hard, as the prices of cocoons and raw silk have crashed. Cocoon price in Karnataka has fallen from an average Rs 312 per kg (February 2011) to Rs 177 per kg (October 2011), and the price of raw silk has come down from Rs 2,701 per kg (February 2011) to Rs 1,892 per kg (October 2011).

CM writes to FM

Expressing shock over the Centre’s cold response to the request of Karnataka farmers, Chief Minister D V Sadananda Gowda on Monday shot off a letter to the Union Finance Minister urging him to reconsider his decision.

Gowda said the Centre’s decision would severely affect thousands of farmers and reelers. Noting that farmers had started destroying mulberry plantations, Gowda said the huge investment proposed in the 12th Five Year Plan by both the State and the Centre would go waste.

Panel to look into crash in silk price

The State government on Monday constituted a committee comprising silk farmers and officials to study the reasons for the crash in the prices of cocoons and raw silk, reports DHNS from Bangalore. The committee will also fix the production cost of cocoons. A decision to this effect was taken at a meeting chaired by Chief Minister D V Sadananda Gowda with farmers, silk reelers and officials of the Sericulture Department.

Speaking to reporters after the meeting, Gowda said the committee had been asked to submit its report within a month. “Based on the recommendations in the report, we will take up the problems faced by silk farmers with the Union government,” Gowda said. The once-thriving silk industry in the State is in crisis, as prices have crashed following the Centre’s decision to slash import duties on raw silk.

Farmers’ associations have sought that the State place demands before the Centre to announce minimum support price, increase import duty from five per cent to 30 per cent and set up a contingency fund of Rs 200 crore to be utilised in times of distress.