The Cotton Association Of India has requested the Central Government to withdraw 10% customs duty on extra-long staple cotton from February 2 this year. In a letter addressed to finance minister Nirmala Sitharaman, CAI president Atul S Ganatra said cotton has been under the open general license (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, he said.
“India hardly produces this type of cotton and there is a clear shortfall of the same. Our country requires such ELS and contamination-free sustainable cotton which is not produced in our country to cater to international demand,” Ganatra said.
Due to imposition of 10% import duty on cotton, raw material has become costly. This has reduced India’s competitiveness vis-à-vis countries like China, Bangladesh, Pakistan and Vietnam.
Moreover, prices of ELS cotton in India are very high. The ELS kapas rate is in between Rs 8,500 and Rs 9,000 per quintal which is higher by about Rs 2,500 i.e. about 30% higher than the minimum support price (MSP), he said.
“Therefore, the interest of the farmers won’t be impacted adversely if 10% import duty on cotton is removed. However, if import duty is not removed, domestic prices will go up further and create more hardship to the domestic textile sector,” Ganatra pointed out.