Stalin asks Centre to take steps to reduce price of cotton and yarn

If this situation is not reined in, large numbers of apparel and home textile units may soon become unviable resulting in closure and consequent large scale unemployment, Stalin said

With apparel exporters in Tiruppur hit hard by ever-increasing prices of yarn and cotton, Tamil Nadu Chief Minister M K Stalin on Monday sought Centre’s immediate intervention in reducing the price by removing 11 per cent Import Duty levied on cotton and other measures.

In a letter to Union Textiles Minister Piyush Goyal, Stalin said the textile industry is the second largest employment provider in the state, which accounts for one-third the size of the country’s textile business. The present crisis, Stalin said, has led to mass cancellation of export orders and hardships in fulfilling long term export commitments.

“If this situation is not reined in, large numbers of apparel and home textile units may soon become unviable resulting in closure and consequent large scale unemployment and industrial unrest,” the Chief Minister warned.

He said one of the major reasons for the cotton price volatility is due to the imposition of 5 per cent Basic Customs Duty (BCD), 5 per cent Agriculture Infrastructure Development Cess (AIDC) and 10% Social Welfare Cess imposed on these components in the Union Budget 2021-22 which amounts to imposition of an overall import duty of 11 per cent.

Another reason for spurt in cotton prices is the bulk discount offered by the Cotton Corporation of India (CCI) to the traders who procured almost 70 per cent of Minimum Support Price (MSP) cotton auctioned by CCI at a lower rate during the cotton season due to availability of 90 days free period and thereafter speculated the market, Stalin said.

To reduce the price of yarn and cotton and protect the industry, Stalin said, the Centre should remove 11 per cent Import Duty levied on cotton to avoid further speculation in the coming months, besides revamping the commercial terms and conditions prescribed by the CCI for e-auction of cotton by reducing the minimum lot size to 500 bales which is sustainable for the MSMEs.

Giving priority to yarn manufacturers in procurement of cotton over traders, and extending 5 per cent interest subvention to the spinning mills towards procurement of cotton during peak season (December to March) are the other steps Stalin suggested to the Centre.

The ever-increasing price of yarn, which has gone up by over Rs 100 a kg in just a year, and the spiralling cost of raw materials are some of the major issues that have been confronting the multi-crore industry for a while.

The price of 30s combed yarn has gone up from Rs 240 in November 2020 to Rs 380 in November 2021 for a kg, causing concern to exporters, especially those who fall under Micro, Small, and Medium Enterprises (MSMEs) category.

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