Govt considering textile duty structure rejig in Union Budget: Report

The $200-billion Indian apparel and textile industry is likely to get relief via a rejig in duty structure in the next Union Budget, according to a report in Live Mint. The report cited a senior government official saying that the textile duty adjustments will help make Indian sellers competitive in the Western markets.

The textile industry has repeatedly sought relief from the government, saying they are battling high cotton prices. Indian cotton prices had touched a record high of Rs 1 lakh per candy at one point this FY, likely because of a mismatch in demand and supply. The industry also says a slowdown in exports of cotton yarn, a key raw material, due to weakening global demand has also tied their hands.

Until the new cotton season, the prices are expected to remain high.

“Our thinking is to avoid inverted [duty] structure in trade and to make sure that if it is necessary to import raw material, the price should not be excessive, which will make our final product uncompetitive,” the official told Mint.

“Meanwhile, we are taking steps to boost the production of cotton by implementing newer techniques for efficient farming.

Branding activity of Indian varieties of cotton, such as ‘Kasturi cotton’ is also taken up in collaboration with the industry, which will have a long-term positive impact on the industry. Free trade agreements, especially with the EU, UK and Australia, will open up large markets for Indian textile products,” the official added.

Atul S Ganatra, president of the Cotton Association of India, sought an exemption from import duty. “The government has imposed an 11% import duty on cotton from 2 February 2021. This has drastically eroded the competitiveness of our value-added products in the international markets, and our textile industry, which is the second largest employment provider in the country, is now constrained to work with only 50% of its installed capacity.”

Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI), echoed the sentiment. “We have been seeking removal of duty on cotton …largely on extra-long-staple cotton which India does not have…as cotton prices are under stress.”