In a big relief for the Indian textile and apparel industry, the Government has allowed duty free import of cotton until 30 September 2022.
Notably, there was so far 11 per cent import duty (5 percent basic customs duty and 5 percent agri infra development cess) on cotton. Removal of this duty was a long pending demand of the industry, and with cotton prices becoming higher, the industry has been continuously demanding for the same.
Various trade bodies have welcomed the step initiated by the Government and said that it was need of the hour. The Government has also removed the Agriculture Infrastructure and Development Cess (AIDC) on the imports.
Ministry of Finance (Department of Commerce) issued a notification which says this decision comes into effect from today (14 April 2022), and will remain in force up to and inclusive of the 30 September 2022.
The duty-free imports will help textile mills, which could import around 2.5 million bales of cotton in the 2021/22 marketing year ending 30 September.
Indian mills could import cotton from Australia, Brazil, African countries and US, which are supplying cotton at lower prices.
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An unprecedented hike in domestic cotton prices due to lower-than-anticipated crop yields had put pressure on the textile sector’s export competitiveness vis-a-vis rivals like Vietnam and Bangladesh who don’t levy any import duty on cotton.
It has been said that the higher cotton prices were also reflected in apparel and footwear inflation faced by domestic consumers, which surged to 9.4 per cent in March, when retail inflation hit a 17-month high.
Welcoming the Government decision, Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF), Coimbatore said, “The removal of duty will help the entire textile manufacturing eco-system, support the overall balance sheet of cotton and also reduce the speculative trade.”
Source : https://in.apparelresources.com/