NCTC appeals to the Hon’ble Minister of Textiles to allow duty-free import of cotton to avoid cancellation of orders, production stoppage and job losses
New Delhi, Monday, 04 April 2022: An Industry Delegation comprising Members of National Committee on Textiles and Clothing (NCTC), today met, the Hon’ble Union Minister of Textiles, Commerce & Industry, Consumer Affairs and Food & Public Distribution, Shri Piyush Goyal, and submitted a Joint Memorandum to allow duty-free import of cotton not only to tide over the present crisis but also to achieve the desired target set for the Indian T&C Industry for the financial year 2022-23.
The NCTC delegation comprised of Shri T. Rajkumar, Chairman, Confederation of Indian Textile Industry (CITI), Shri Narendra Goenka, Chairman, Apparel Export Promotion Council (AEPC), Shri Manoj Patodia, Chairman, The Cotton Textiles Export Promotion Council (TEXPROCIL), Shri Ravi Sam, Chairman, The Southern India Mills’ Association (SIMA), and Shri Raja M. Shanmugham, President, Tirupur Exporters Association (TEA).
The industry delegation thanked the Hon’ble Prime Minister and Hon’ble Union Minister of Textiles for taking numerous path-breaking and historical policy initiatives that enabled India to achieve US$ 400 billion exports that too prior to scheduled deadline and making India to become the fastest growing economy in the world. The total textiles and clothing export increased from US$ 29.454 billion to US$ 39.734 billion (estimated) and recorded a growth of 67% in the financial year 2021-22 in comparison to the previous year. Similarly, the cotton textile exports also recorded a growth of 56% by reaching US$ 15.056 billion (estimated).
The National Committee on Textiles and Clothing (NCTC) delegation apprised the Hon’ble Minister about the shortage of quality cotton that the Textiles and Clothing (T&C) Industry is facing at the moment on the backdrop of declining domestic cotton production during the current cotton season (around 340 lakh bales of 170 kgs each as against 360-370 lakh bales production in the previous years) and the increased T&C Industry’s demand for cotton (360 lakh bales as against 300 to 320 lakh bales in the previous years) and an estimated export of 50 lakh bales. The Industry delegation appealed to the Hon’ble Union Minister of Textiles to allow the duty-free import of cotton not only to tide over the present crisis but also to achieve the desired target set for the Indian T&C Industry for the financial year 2022-23.
The NCTC delegation apprised the Hon’ble Minister that the levy of 11% import duty on cotton is affecting the global competitiveness of the Indian T&C Industry, as the cotton traders are adopting an import parity pricing policy. They also apprised the Hon’ble Minister From January 2022, the Indian cotton price is ruling Rs.15/- to Rs.20/- per kg higher than the international price. The T&C Industry is compelled to import high quality extra-long-staple cotton, sustainable cotton, and contamination free cotton by paying 11% duty to meet the export commitments, whereas, the competing countries (Bangladesh, Vietnam, China, Pakistan, etc.) enjoy the advantage of duty-free import of cotton.
The textile Industry delegation apprised the Hon’ble Minister that the steep increase in the cotton prices and shortage of quality cotton have resulted in the cancellation of Indian export orders and diversion of the same to Bangladesh, Vietnam, China, and Pakistan by the importers in EU, USA, Japan, etc. They cited India’s share in US bedlinen exports has declined from an average of 55% during 2021 to 44.85% in the month of January 2022. While Pakistan’s share has increased to 25.71% from 20% and China’s share increased to 19.37% from 12% during the same period.
The NCTC delegation also pointed out that the MSME segments, including Handloom, Powerloom, Independent Knitting, Weaving, Processing, Garmenting and Made-up segments that account over 80% of the exports have no access for advance authorization scheme and duty-free import of cotton. These are the worst affected segments and their capacity utilization has already dwindled down to below 70%, resulting in huge job losses and a declining trend in the GST revenue.
The Industry delegation requested to the Hon’ble Union Minister of Textiles that the only option left for the T&C Industry is to allow duty-free import of cotton not only to tide over the present crisis but also to achieve the cotton textile’s export target of US$ 16.963 billion (25% increase) and the total textiles and clothing’s export target of US$ 47.029 billion (6% increase) for the financial year 2022-23. The Indian T&C Industry is optimistic to achieve this steep increase in the target if cotton is made available to them at an internationally competitive rate.
The NCTC delegation opined that the duty-free import may not exceed 40 lakh bales during the current season. Moreover, it will take three to four months’ time for the imported cotton to reach the Indian textile mills. As the cotton farmers have already sold their cotton crop of present season and are preparing for sowing for the next season, allowing duty-free import of cotton will not at all affect the Indian cotton farmers.