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Shortage of VSF & ELS cotton in the industry: SIMA

Mar 19, 2021
Shortage of VSF & ELS cotton in the industry: SIMA

The Indian textiles and clothing industry has established its dominant value added product market share both in domestic and international markets during the last several years especially in the recent past, more so in the superfine VSF and its blended textiles and clothing products.  The industry has been pleading the government to remove anti-dumping duty of USD 0.103 to 0. 512 per kg imposed on the VSF during the last several years, which is under active consideration.  The government is mulling the removal at the time of sunset review which is due in August 2021.

 In the meanwhile, the Union Budget 2021-22 imposed 5 per cent basic customs duty and 5 per cent AIDC on cotton (effective rate 11 per cent including 10 per cent social welfare surcharge).  This has greatly impacted the supply chain of both domestic and international markets and also spiraled domestic Indian ELS, organic and contamination free cotton prices that are already under acute shortage. 

 In a Press Release issued recently, Ashwin Chandran, Chairman, The Southern Indian Mills’ Association (SIMA), urged for the immediate intervention of the Prime Minister for the removal of both anti-dumping duty on VSF and also the withdrawal of 10 per cent import duty on cotton.   He said that both the high value added market segments account around Rs.1,50,000 crore business size and employ over two million people, fetch GST revenue of Rs.5,000 crore and also forex earnings to the tune of Rs 75,000/- crore apart from catering to the value added segments.  He said that VSF and superfine cotton value chain supplies to the international brands, who have set up retails in the domestic market and the price crisis is being utilised as an opportunity by the neighbouring countries like Bangladesh and therefore, imports started looming large.

 He has reiterated that out of 40 MMF products identified by the Ministry of Textiles under PLI Scheme, 18 products are made out of VSF and its blended fibres.  He stated that the capacity utilization of the spinning and powerloom clusters in Erode alone has been affected to the tune of 30 per cent and therefore, the industry cannot wait till the sunset review and hence, urged the Prime Minister to withdraw the anti-dumping duty immediately.

SIMA chief has stated that when the industry is facing acute shortage of VSF fibre, there is no question of dumping and causing injury to the domestic market.  He has stated that India has been mainly relying on the American PIMA and Egyptian GIZA and other ELS cotton for the domestic and international markets apart from the home grown DCH cotton.  He said that the industry has been mixing the imported cotton with the indigenous cotton, as the availability of Indian cotton is not even 20 per cent and the industry also has been mixing the imported ELS cotton with micro denier polyester modal and other speciality manmade fibres to produce high value added products.  He has stated that the industry has also been using Bunny cotton grown in Telangana and other regions for mixing with the imported cotton and produce fine count yarns and its products.  Ashwin has said that the DCH cotton was costing around Rs.52,000/- per candy of 355 kgs during October 2020 and Rs.65,000/- in January 2021 and the same got increased to Rs.73,000/- after the levy of 10 per cent duty.  This has greatly impacted the entire value chain. 

 Against this background, SIMA Chairman has sought immediate intervention of the Prime Minister for the removal of anti-dumping duty on VSF and withdrawal of 10 per cent import duty on cotton.