SIMA urges 11% import duty exemption for off-season cotton

This exemption was also granted during the 2021-22 cotton seasons.

Dr SK Sundararaman, Chairman, Southern India Mills’ Association (SIMA), has urged the Government to consider exempting cotton from the 11 per cent import duty during the off-season from April to October. He mentioned that this exemption was also granted during the 2021-22 cotton seasons. According to him, this move would create a win-win situation for both cotton farmers and the industry, eliminating speculation about cotton prices by traders.

Dr Sundararaman explained that the 11 per cent import duty on cotton has made Indian cotton 10 per cent to 15 per cent more expensive, as domestic cotton traders base their prices on import parity. Additionally, he highlighted that exporters have to forgo the RoDTEP export benefit when importing cotton under the Advance Authorisation Scheme. This situation has diminished the global competitiveness of cotton textile exports.

The SIMA delegation had a meeting with Nirmala Sitharaman, Minister of Finance, in Coimbatore recently. They submitted a memorandum requesting the conversion of short-term loans offered under the ECGLS COVID relief measure into long-term loans with a repayment period extended from three years to six years. This measure aims to alleviate the financial burden on textile units and prevent them from becoming non-performing assets (NPAs), benefiting both the textile industry and financial institutions.

Dr Sundararaman emphasised that the financial stability of spinning mills in South India, especially in Tamil Nadu, which contributes to 45 per cent of the production capacity, is at risk in the current situation. He noted that spinning mills in Tamil Nadu incur costs ranging from Rs 4 to Rs 7 per kg to procure raw materials from states like Gujarat and Maharashtra. Additionally, they have to spend a similar amount to sell over 40 per cent of the yarn in Maharashtra and other states. Furthermore, the powerloom and weaving sectors in Tamil Nadu send more than two crore metres of fabric daily for processing to states like Gujarat and Maharashtra due to inadequate processing facilities in Tamil Nadu. This situation increases the cost of fabric by Rs 2 to Rs 3 per metre.