Mills seek withdrawal of cotton import duty

Coimbatore,  Southern India Mills Association (SIMA) on Monday appealed to Union Finance Minister Nirmala Sitharaman to withdraw the cotton import duty, which it claimed, is severely hurting the global competitiveness of the Indian Textile and Clothing Industry.

The SIMA cited the announcement on the levy of 5 per cent BCD (Basic Cotton Duty) and 5 per cent AIDC (Agriculture Infrastructure and Development Cess) with applicable cess on the import of cotton in budget 2021-22. The levy of these import duties is a major blow to the Indian cotton textiles industry which was just recovering from losses suffered during the pandemic and lockdowns last year, SIMA Chairman Ashwin Chandran said in a statement here.

Similar import duty policy intervention of 10 per cent customs duty, 4 per cent additional customs duty and 3 per cent education cess exercised in 2007-08 had a severe impact on Indian spinning industry and after understanding the ill-effects, the government withdrew the import duty, he pointed out.

In view of this, Ashwin Chandran sought withdrawal of both the BCD and AIDC levied on cotton to create a level playing field on the raw material front for the Indian Textile and Clothing Industry.

While appreciating the bold initiatives of the ministry in addressing the structural issues in Man-Made Fibres, he stated that the import duty on raw cotton would erode the competitiveness of the value-added segments that has a business size of around Rs 50,000 crore in exports and Rs 25,000 crore in the domestic market.

These segments provide jobs to around 12 lakh people, he said.

“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.”

The Government might receive around Rs 360 crore per annum as additional revenue on account of the import duty on cotton but will in turn imperil annual GST revenues of around Rs 1,800 crore,he claimed.

“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 cottons in India at the moment,” he said.PTI