The Cotton Association of India (CAI) has reiterated its request to the government to withdraw 10 per cent customs duty imposed on cotton since 2 February this year. In a letter addressed to finance minister Nirmala Sitharaman, CAI president Atul S Ganatra said cotton has been under the open general licence (OGL) scheme without any quantitative and qualitative restrictions for last several decades.
India produces merely 5 to 6 lakh bales of ELS (extra-long staple) cotton, against the actual requirement of about 12 to15 lakh bales, and about 5 to 7 lakh bales of non-ELS contamination-free sustainable cotton. “India requires such ELS and contamination-free sustainable cotton which is not produced in our country to cater to international demand,” Ganatra said.
He added that due to the imposition of 10% import duty on cotton, raw material has become costly, which is reducing India’s competitiveness vis-à-vis countries like China, Bangladesh, Pakistan and Vietnam.
Moreover, prices of ELS cotton in India are very high and the range of ELS kapas rate is in between Rs 8,500 and Rs 9,000 per quintal, which is higher by about Rs 2,500 a quintal, about 30per cent higher than the minimum support price (MSP).
“Therefore, the interest of the farmers won’t be impacted adversely by removal of 10% import duty on cotton. If the import duty is not removed, domestic prices will go up further and create more hardship to the domestic textile sector,” Ganatra said.