5-month duty relief for cotton imports

NEW DELHI: Govt on Saturday announced a five-month duty exemption for all cotton imports into the country, aiming to cool down prices and ensure that the domestic garment and textiles industry remains in a robust state.

The exemption will be available from June 1 to Oct 31, the ministry said in a notification amid demands from the industry to ensure adequate supply at reasonable cost.

"The temporary duty exemption is expected to reduce input costs across the textile and apparel sector, thereby providing targeted relief to manufacturers and consumers, while also keeping the interests of domestic farmers in mind. Overall, the measure is anticipated to have a positive impact on the performance of domestic textile industry, especially the small and medium enterprises, ensuring better availability of cotton in the market," the finance ministry said.

Cotton is the dominant input for India's textiles exports, one of the largest items in the export basket.

"The measure, implemented during the cotton off-season, will ensure adequate availability of cotton for the textile industry, support MSMEs, moderate input costs and strengthen the competitiveness of Indian textiles while safeguarding farmers' interests and ensuring market stability," the textile ministry said.

The industry appeared relieved. "This will moderate cotton prices and thus lead to reduction of input costs across the textile and apparel sector, thereby providing much-needed relief to micro, small and medium enterprises in the downstream industry which have been facing challenges due to the sharp increase in cotton and yarn prices. This timely intervention will also help the apparel industry retain its export competitiveness in cotton-based products," said Apparel Export Promotion Council secretary general Mithileshwar Thakur.

Confederation of Indian Textiles Industry (CITI) said that the 11% import duty on cotton was serving as a major hurdle for the Indian textile and apparel sector as major Asian competitors had duty-free access to cotton.

"Cotton imports are largely quality and specification-driven, catering to specialised requirements and back-to-back export orders. They do not displace domestic cotton," CITI chairman Ashwin Chandran said in a statement.
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