Indian textile players plead if it is inevitable to import textile raw materials the import duty should not increase its price which makes the final exportable product uncompetitive. Sources say the Indian government would address this issue in the coming budget.
The issue of import duty on raw materials agitated the textile exporters this year when the Indian cotton prices in Indian domestic increased much above the global level despite good cotton crops. The textile players alleged that prices were being manipulated because importing cotton was not feasible because of high protective duty. They pleaded with the government to waive the duties on cotton as the mills were operating on the curtailed capacity to make yarn from high-priced local cotton for either local marketing or exports.
Sources in the Commerce Ministry reveal that the Indian government has realized the flaw in the import regime and has decided to announce adjustments in the duty structure for the $200-billion Indian apparel and textile sector in the Union budget next month. The aim is to improve Indian competitiveness in recessionary Western markets.
This year exports of cotton yarn are expected to decline by 28-30 percent partly due to slowing demand and partly due to high production costs. Things might change next year as 2022-23 could ease cotton prices. If Indian cotton prices are in line with global cotton rates there would be no need to import the commodity even at zero duty.
The current duty on the import of cotton is 11 percent which increases landed cost much above the global level. Another issue is that extra-long staple fiber is not produced in large​​ quantities in India and it has to be imported for the production of numerous high-priced export apparel. Its import does not impact the Indian farmers but the duty of extra-long staple cotton increases the cost of imported raw material. Indian spinners are waiting for the budget with the hope that this anomaly would be addressed.
