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Friday, March 29, 2024

CITI demands for MEIS & IES benefits for cotton yarn

The Confederation of Indian Textile Industry (CITI) has urged the Central government to immediately restore Merchandise Exports from India Scheme (MEIS) and Interest Equalisation Scheme (IES) benefits for cotton yarn. During April-September 2017, India’s cotton yarn exports fell 10 % to 464 million kg from 517 million kg during same period in 2016.

He pointed out that Indian spinning mills performed well in exports during 2013-14 taking advantage of the 2 % incremental export incentive, 2 % interest subvention and 3 % focus market incentive and achieved a record export of around $4,555 million of yarn. However, in 2014, the benefits of export incentives provided to cotton yarn were withdrawn due to some inexplicable reasons. During the year 2016-17, the cotton yarn export was only around $3,352 million, registering a decline of 26%. This is despite adding over 3 million spindles and 62,000 rotors spinning capacity during the same period.

Jain further stated that India is today exporting more than 60 lakh bales of cotton every year i.e. about 20% of the total cotton production. “Exporting of raw cotton bales instead of value addition by converting to yarn is leading to loss of valuable foreign exchange, employment and better remuneration to farmers.”

“When export benefits such as MEIS and IES were introduced …, every other segment in the textile value chain including MMF spun yarn were provided with the benefits while cotton yarn was not considered. This policy decision has adversely affected cotton yarn exports to China, the largest importer of cotton yarn,” Jain said in the release.

Cotton being a seasonable commodity available for four months, 3% IES benefit is essential to maintain six to nine months cotton inventory and also to ensure consistency in quality of yarn supplied, at a lower interest cost. Interest rate in India ranges between 10% and 12.5% while interest rate in competing nations ranges much lower between 4% and 6%.

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