The Technology Mission on Cotton 2.0, proposed by the Ministry of Textiles to address the issues of quality improvement and adoption of global best practices in cotton farming is yet to be announced and implemented.
The announcement with regard to the levy of 5% BCD and 5% AIDC with an applicable cess on the import of cotton in the Union Budget 2021-22 does benefit the Indian farmers while having severe detrimental impact on the high value-added segments and eroding the competitiveness of our garments and home textile exporters. The levy of these import duties is a major blow to the Indian Cotton Textiles Industry which was just recovering from the losses suffered during the pandemic and lockdowns last year.
Similar import duty policy intervention of 10% customs duty, 4% additional customs duty and 3% education cess exercised during 2007-08 had a severe impact on Indian spinning industry and after understanding the ill effects the Government withdrew the import duty.
In a Press Release issued here today, Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA) appealed to the Union Finance Minister to withdraw both the basic customs duty and the agriculture infrastructure development cess levied on cotton to create a level playing field on the raw material front for the Indian Textile and Clothing Industry.
Ashwin, while appreciating the bold initiatives of the Finance Ministry in addressing the structural issues in Man-Made Fibres, stated that the import duty on raw cotton would erode the competitiveness of the value-added segments that have a business size of around Rs.50,000 crores in exports and Rs.25,000 crores in the domestic market.
These segments provide jobs to around 12 lakh people. He said that it has taken over a decade for the Indian textile industry to build up the market share in these segments and with the levy of cotton import duty, we will lose our competitiveness and market share to the competing countries such as Bangladesh, Sri Lanka, Pakistan and Vietnam.
SIMA Chairman stated that the Government might receive around Rs.360 crores per annum as additional revenue on account of the import duty on cotton but will in turn imperil annual GST revenues of around Rs.1800 crores. More importantly, the import duty will not benefit the Indian cotton farmers owing to the negligible volume of imports and the non-availability of such speciality kinds of cotton in India at the moment.
He stated that bed linen and terry towel exports to USA to the tune of US $ 1200 million and another US$ 500 million to EU countries per annum are predominantly produced out of ELS and contamination free cottons. He has pointed out that since the Indian textiles and clothing exporters are predominantly MSMEs, it is practically impossible for them to avail duty exemption under the Advance Authorization Scheme.
He has stated that none of the countries in the global textile trade including our major competitors such as China, Bangladesh, Pakistan, Vietnam and Sri Lanka, levy an import duty on cotton. Therefore, this duty levied on cotton import during the last budget is a major concern and a huge impediment to our global competitiveness and future growth of Textile and Clothing Industry.