The Cotton Association of India (CAI) has urged the central government to withdraw the 11 per cent import duty on cotton to help the textile industry access raw material, or ginned cotton, at economical prices. In a letter to Union Minister of Textiles Piyush Goyal, association president Atual Ganatra said most textile units in the country are currently functioning at 50 per cent capacity due to paucity of cotton.
In his letter, Ganatra said that currently, Indian cotton is selling at a price 15 per cent higher than international prices. While the high demand has hit the availability of raw material, the imposition of 11 per cent import duty on cotton has affected the competitiveness of value-added products from India in international markets. He has urged the central government to withdraw its 11 per cent import duty, which will allow the textile industry to access raw material at competitive prices.
Farmer organisations, however, have protested any move to remove the import duty on cotton. After a year of record-breaking prices, cotton growers across the country are holding on to their kapas, or raw unginned seed cotton, in hope of good prices. At present, kapas is trading at around Rs 7,000-8,000/quintal in most wholesale markets, as against the government-declared Minimum Support Price of Rs 6,080. Most growers are holding on to their produce as they are hopeful that prices will rise further.
While the production of Indian cotton crop is expected to reach 344 lakh bales (1 bale contains 175 kg of ginned pressed cotton), given the holding of raw kapas by farmers, the availability of raw material has been hit.
Ganatra’s letter comes at a time when Indian growers are about to offload their produce in the markets.
Earlier this year, in September, cotton marketing prices had shot up to Rs 9,000-9,5000/quintal, but failed to remain at that level. Most cotton traders said they expect prices of kapas to remain between Rs 7,000 and 7,500 for the rest of the season. However, cheap imports can dampen the prices, said cotton ginners.
Terming the demand by the Association ‘unfair’, farmer leader Anil Ghanwat of the Shetkari Sanghtana said, “Removing cotton import duty at this stage will reduce raw cotton prices, which will hurt cotton farmers financially”.