Exemption of Import duty on cotton will help achieve splendid growth in Textile exports
Custom Duties Exemption for all Cotton Imports till 30 Sept. 2022.
New Delhi (India), April 16: This exemption would benefit the textile chain, i.e. Yarn, Fabric, Garments, and Made Ups and provide relief to consumers as stated by the Government of India.
HEWA wholeheartedly welcomes the above decision to bring smooth availability of cotton in the offseason. That will surely ease the pressure on demand, bring a full stop to the volatile situation of the last six months, and will help Indian Exporter to achieve splendid growth in textile exports in FY-2023. No doubt, it will bring stability to the prices of Cotton to some extent due to the availability of cotton in the market.
Even after multiple challenges like Covid and Geo-Political conflicts, India’s overall exports touched an all-time historic record of $669.65 bn in FY-2022.
There is a significant rise in Textile Exports from India due to various policy initiatives taken by the Government of India as an extension of RoSCTL, starting of RoDTEP scheme, Technical Textile Mission, PLI Scheme, PM-MITRA, releasing various dues & arrears by the Government of India, and China plus policy adopted by overseas buyers. The textiles exports last fiscal year stood at USD 43 billion against USD 33 billion in the previous year, and the market share of Indian textile increased significantly to the USA.
But the above exports figure could have been much more if we had not witnessed the sharp rise in the cotton prices from the last year, October 2021. (Example: from INR 59000 per Cotton Candy of 356 Kgs of Shankar 6 to INR 95000 per Candy till April 2022).
HEWA feels that Importing cotton will not have much impact on prices as after adding freight and other cost, landing prices on import (cotton) from Australia, USA, Africa etc. will be (almost) same as Government is late by 2-3 months to bring this decision, but this is the right decision in the right direction.
HEWA had earlier raised this issue in December 2021 and, after getting feedback from Industry, had predicted that cotton prices could go out of control due to the aforementioned factors.
The exemption on the import of cotton will help bring down the scarcity created by hoarders traders, ease the supply side, and boost exports of finished goods.
HEWA appeals Government of India to induce some checks and balances to stop the Leakage of uncontrolled exports of raw materials to our competitor countries like China, Bangladesh etc., which disturbs the supply-demand cycle of our raw material.
HEWA also requested Govt to revoke incentives on raw material (RoDTEP 3.1+0.5% Dbk, Yarn RoDTEP 3.8% +1.8% Dbk) to promote the exports of value addition that continue the employment equilibrium in the textile sectors as it is a well-known fact that value addition and finished goods can generate 10x more employment opportunities and 2-5x more revenue in exports.
HEWA expect prices to cool down in 2 weeks and hope the exporter will regain the pace. Govt is already taking steps to promote finished and value-added goods on one side, helping farmers to yield more cotton crops per hectare and on the other side—free access to Indian goods overseas by aggressively making Trade Pacts with various countries.
HEWA is sure that after duty-free access of Indian textiles to UAE and Australia, the Above Scheme and other initiatives like mega integrated Park scheme throughout India, Existing ATUFS, Continuation of Interest Equalization Scheme will help textiles to promote manufacturing to scale up production and achieve sustained growth in textile sector further Indian Exporters can make their best possible contribution towards the cherished goal of our beloved Hon’ble PM Modi ‘ATMANIRBHAR BHARAT MISSION’.