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CAI urges Indian govt to remove import duty on cotton

Jun 30, 2021
CAI urges Indian govt to remove import duty on cotton

Ahmedabad, Gujarat

The Cotton Association of India (CAI) has written a letter to the Union Finance Minister Nirmala Sitharaman for the withdrawal of 10% customs duty imposed on cotton imports on February 2, 2021. In the letter, Atul Ganatra, President, CAI, said that India produced merely 5-6 lakh bales (each of 170 kg) of ELS variety of cotton as against the local requirement of about 12 to 15 lakh bales of ELS and about 5-7 lakh bales of non ELS contamination-free sustainable cotton.

The cotton has been under Open General License (OGL) Scheme without any quantitative and qualitative restrictions for last several decades.

Prices of ELS cotton in India are very high and the range of ELS Kapas rate in the country is in between Rs 8,500 to 9,000 per quintal which is higher by about Rs 2,500 or about 30 per cent than the Minimum Support Price (MSP). Therefore, the interest of the farmers is not impacted adversely by removal of 10% import duty on cotton, Ganatra said.

Emphasising on the urgent need for withdrawal of import duty, Ganatra stated that if the import duty is not removed, the domestic prices will go up further and create more hardship to the domestic textile sector viz. spinning, weaving and garment industry. Cotton prices in the domestic markets have already gone up from Rs 43,600 per candy (each of 356 kg of processed ginned 29.5 mm cotton) in January 2021, to Rs 51,800 per candy now, indicating nearly 20 per cent rise in the prices.

CAI has expressed concerns of India losing its competitiveness to China, Pakistan and Bangladesh in the international market. With 10 per cent customs duty on cotton varieties including extra-long staple (ELS), the export-oriented garments and cotton-made ups become costlier.


Source: The Hindu Business Line

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