Domestic cotton prices are 15% higher than on the global market.
The Cotton Association of India (CAI), the industry’s apex body, has urged Piyush Goyal, Minister of Textiles, Commerce and Food, to remove the 11% import duty on cotton immediately.
In a letter to Goyal, Atul S Ganatra, President, CAI, stated that the duty must be removed because domestic cotton prices are 15% higher than in competing countries on the global market.
“Due to this, the availability of raw materials to our textile industry at a competitive rate has been severely impacted. This has eroded the competitiveness of our value-added products in the international market and the textile industry is only working at 50 per capacity,†he said in the letter.
In the domestic market, ginned cotton is currently priced at Rs 66,750 per candy (356 kg). The weighted average price of raw cotton across the yards of the agricultural produce marketing committee (APMC) is currently Rs 8,309 per quintal.
Price of ICE futures
Cotton at the Intercontinental Exchange (ICE) in New York is quoted at Rs 53,850/candy for March delivery. Cotton for December delivery on the MCX is currently quoted at Rs 31,560 per bale of 170 kg (66,090/candy).
He believes that eliminating the duty will help to stabilise cotton prices and help the textile industry function at its best.
Due to a shortage of quality cotton, the Centre earlier this year allowed the textile industry to import cotton at zero customs duty until October 31. Another reason for allowing imports was that the price of natural fibre had risen to Rs 1 lakh per candy.
The industry requested that duty-free imports be extended until December 31, but the Centre did not respond.
News courtesy: The Hindu Business Line