Withdraw customs duty and agri cess on cotton: SIMA appeals Finance Minister

The Southern India Mills’ Association (SIMA) has appealed to the Union finance minister Nirmala Sitharaman to withdraw both the basic customs duty and the agriculture infrastructure development cess (AIDC) levied on cotton to create a level playing field on the raw material front for the Indian textile and clothing Industry. At present, import of cotton attracts a 5 per cent basic customs duty and another 5 per cent AIDC.
In a release issued by SIMA on Monday, Ashwin Chandran, chairman of the association said that the import duty on raw cotton would erode the competitiveness of the value-added segments that have a business size of around Rs 50,000 crores in exports and Rs 25,000 crores in the domestic market. These segments provide jobs to around 12 lakh people.

He said that it has taken over a decade for the Indian textile industry to build up the market share in these segments and with the levy of cotton import duty, we will lose our competitiveness and market share to the competing countries such as Bangladesh, Sri Lanka, Pakistan and Vietnam.

Chandran stated that the government might receive around Rs 360 crores per annum as additional revenue on account of the import duty on cotton but will in turn imperil annual GST revenues of around Rs 1800 crores. More importantly, the import duty will not benefit the Indian cotton farmers owing to the negligible volume of imports and the non-availability of such speciality cottons in India at the moment.

SIMA chairman said that bed linen and terry towel exports to the USA to the tune of US $1,200 million and another US$ 500 million to EU countries per annum are predominantly produced out of ELS (extra long staple) and contamination-free cottons. He has pointed out that since the Indian textiles and clothing exporters are predominantly MSMEs, it is practically impossible for them to avail duty exemption under the Advance Authorization Scheme.

Chandran has stated that none of the countries in the global textile trade including India's major competitors such as China, Bangladesh, Pakistan, Vietnam and Sri Lanka levy an import duty on cotton. Therefore, this duty levied on cotton import in the last Union budget is a major concern and a huge impediment to the country's global competitiveness and future growth of the textile and clothing Industry.

"We are given to understand that the ministry of textiles and the ministry of commerce and industry have already recommended the removal of import duty on cotton and the ministry of agriculture has also given its nod. Therefore, the SIMA Chairman has fervently appealed to the Union finance minister to take steps to withdraw the import duty on a war footing to enable the ailing Indian cotton textile industry to sustain its global competitiveness and achieve a sustained growth rate in the post-Covid period," the release added.