Import duty waiver on cotton: Goyal tells concerned authorities to finalise matter early

Amid unprecedented rise in cotton and yarn prices in the current season, Union Minister Piyush Goyal has directed the concerned authorities to "finalise the matter early", as regards to the extension of import duty waiver on cotton till December 31.

The government last month exempted all customs duty on import of cotton till September 30, to lower the price of cotton in public interest.

The minister for Textiles and Commerce & Industry held an interactive meeting with the newly constituted Textile Advisory Group in Mumbai on Saturday to address issues relating to augmenting present supplies of cotton and also strengthening productivity.

To meet the present requirement, the minister called for facilitating import from destinations where stocks are available and resolving procedural requirements.

"While addressing the approaches for augmentation in short-term by import, Textiles Secretary Upendra Prasad Singh advised industry to approach the Ministry of Agriculture & Farmers' Welfare for procedural requirements to enable import from some destinations," an official statement said.

"As regards extension of the period of waiver of import duty up to December 31, 2022, Goyal directed the concerned authorities to finalise the matter early," it added.

Chairman of the Textile Advisory Group Suresh Kotak stressed the need to ensure seed availability for sowing especially new early maturing varieties and the need to revamp the seed system to enhance productivity of Indian cotton from present stagnation.

"Position on availability of cotton now was brought out and a request was made to help logistics to ensure shipping in time from three sources internationally," the Textile Ministry statement said.

Kotak shared that as per estimates of Committee on Cotton Production and Consumption, carry over/closing stock is 41.27 lakh bales, which is about 12.66 per cent stock to use ratio and equivalent to stock for 45 days consumption.

The predominantly cotton-based textile industry is facing a long-drawn recession on the cotton front as the cotton price has increased from Rs 44,500 per candy in February 2021, when an 11 per cent import duty was levied on cotton, to Rs 90,000 per candy in March 2022.

The steep increase in cotton price and its impact on the prices of yarns and fabrics is severely impacting the potential growth of the cotton textile value chain.

The Central Board of Indirect Taxes and Customs (CBIC) had notified the exemption from Customs duty and Agriculture Infrastructure development Cess for import of cotton.

The notification came into effect from April 14, 2022 and will remain in force up to September 30, 2022.

Industry has been demanding removal of 5 per cent Basic Customs Duty (BCD) and 5 per cent Agriculture Infrastructure and Development Cess (AIDC) on raw cotton.

Addressing the meeting, Goyal exhorted that containment of factors impinging on productivity need to be tackled in a time-bound manner and the industry should participate in self-regulatory mode.

"The Ginning segment should take responsibility and make pheromone trap technology mandatory to monitor and prevent spread of Pink Bollworm pest attack from Ginneries and oil extraction units to cotton crop in farmers' fields," the minister said.

He suggested that everyone be sensitised for compulsory use of pheromone trap technology through the wide network of the Cotton Corporation of India Ltd, combined with efforts of the state governments.

Goyal also emphasized the need for protecting cotton crop from pink bollworm attack with contributions from Cotton Corporation of India Ltd, Cotton Association of India, Confederation of Indian Textile Industry and the Cotton Textiles Export Promotion Council.

Addressing the need of accuracy of statistics across the value chain to enable policy decision, trade facilitation, traceability etc, Goyal directed that a portal be created with inputs of Cotton Association, Ginners as well as Confederation of Indian Textile Industry & the Southern India Mills' Association.

The portal to work on self-compliance mode. If persuasion and self-compliance do not yield results then 'disincentives' can be built in the systems like Cotton Corporation of India Ltd, not to do any transactions with such defaulters and any government benefits be linked to submission of details, the minister said.