Textile mills welcome withdrawal of import duty on cotton

The Hindu

4 hours ago

Textile mills across the country, and mainly those in the southern States, have welcomed the Union government's decision to withdraw the 11 % import duty on cotton till September 30.
The duty came into effect on February 2, 2021 when India produced 350 lakh bales of cotton annually as against the local demand of 335 lakh bales. The production now is 294 lakh bales as against the demand of 318 lakh bales.
According to the Southern India Mills' Association, the government exempted all varieties of cotton from import duty from April 14, 2022 to September 30, 2022, later extending the exemption until October 31, 2022. This relief supported the industry in capitalising the pent-up demand in the post-COVID period, enabling it to achieve a business size of $ 172 billion, including $ 45 billion in exports.
Since domestic production of Extra-Long Staple (ELS) cotton stood at five lakh bales compared with the annual requirement of 20 lakh bales, the government exempted ELS cotton from import duty with effect from February 20, 2024. The industry has been urging the government to remove the import duty ideally, or at least during the off-season (April 1 to September 30) for all varieties of cotton.
S.K. Sundararaman, chairman of the Association, said the duty exemption will throw opportunities to increase exports. Though direct exporters can take advantage of Advance Authorisation Scheme and import duty free cotton, the predominantly MSME and fragmented nature of the industry requires imported cotton to cater to the nominated business and also meet the long-term contracts in the domestic and export markets
Duty exemption during off-season till 2030 is essential as the Mission for Cotton Productivity with the budget outlay of ₹5,900 crores will take five to seven years to reach self sufficiency in cotton, he added.
The Confederation of Indian Textile Industry (CITI) chairman Rakesh Mehra said India's textile sector is dominated by cotton and the cotton value chain contributes to around 80% of total textile exports. India aims to more than double textile and apparel exports to $100 billion by 2030.
The duty exemption also covers cotton in transit, as the taxable event for determining the rate of duty is the date of filing of the Bill of Entry, after the goods have entered the Indian port. In cases where the Bill of Entry has been filed in advance (as permitted by Customs for faster clearance prior to the arrival of goods), the same can be withdrawn and re-filed afresh at the earliest, that is, before the Out-of-Charge Order is issued for the imported cotton, he said.