Finance Ministry Scraps Import Duty On Cotton

Finance ministry scraps import duty on cotton
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The government suspended a 5% basic customs tariff on cotton importation on Wednesday to boost national supplies of the fiber, which a severe lack has severely hampered the fabrics and garments value chain.

Cotton imports were essentially charged at 11 percent in India regarding the decision (including agriculture infrastructure development cess and surcharges). The cess and penalties will also be abolished due to the revenue department’s recent announcement, allowing cotton to be imported duty-free.

Since February 2021, when an importation fee was imposed, costs of the most frequently utilized cotton kind have over doubled, surpassing Rs 90,000 for every 356-kilogram confection. Cotton prices in India have also surpassed world values by Rs 1,500-2,000 per quintal.

As FE revealed this week, following the gradual rise in cotton prices, which caused local players to attempt to negotiate arrangements, numbers of exporting contracts have either been abandoned or redirected to India’s opponents such as Bangladesh, Vietnam, China, and Pakistan.

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India exported about $40 billion worth of textiles, apparel, and allied products in FY22, rising 67 percent from the previous year, owing to a revival in interest from modern countries (albeit aided by a lower base). On April 4, a team of top officials from various groups serving the textiles and garment industry met with Trade and Textile Minister Piyush Goyal to request the removal of import taxes on cotton to help alleviate the acute raw material scarcity.

Vietnam and Bangladesh, India’s opponents, allow their industry to import fiber duty-free from foreign lands. This provided them with a significant economic benefit in raw materials and duty-free access to sensitive markets such as the United States and the European Union, which New Delhi did not have.

They emphasized that permitting zero-duty c

otton importation is unlikely to affect Indian cotton growers. They’ve already traded this season’s crop to merchants, who supposedly keep onto stockpiles to profit from an artificial market scarcity. 4 million 170 kg bales are doubtful to be imported in any event.

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