Textile and garments industry has raised concerns over the proposed hike in customs duty on cotton in the union budget 2021. Although the industry has welcomed the announcement of Mega Textile Park Scheme to set up seven new textile parks.
The industry has expressed concern over the imposition of a 10 percent Basic Customs Duty (BCD) on cotton. Manufacturers and exporters of cotton textile products have said that the 10 percent duty is unlikely to benefit farmers.
They have appealed to the government to withdraw the import duty to sustain the global competitiveness. Southern India Mills’ Association (SIMA) Chairman Ashwin Chandran said the announcement has come as a severe blow to the ailing cotton textiles and apparel industry.
"India has been globally competitive only in the cotton textile manufacturing, thereby accounting for 80 percent of its total exports. Cotton and cotton waste, which is currently under nil rate of import duty is being subjected to 10 percent import duty through the budgetary announcement comprising of 5 percent BCD and another 5 percent Agriculture Infrastructure and Development Cess (AIDC) on cotton and 10 percent BCD on cotton waste has come as a severe blow for the ailing cotton textiles and apparel industry," Chandran said.
India is the largest producer of cotton in the world, even as Indian cotton manufacturers and exporters have been battling lowered demand due to the coronavirus pandemic. However, Chandran said levy of 10 percent duty will not benefit the cotton farmers as the normal import of 12 to 14 lakh bales per year accounts only around 3 percent of Indian cotton production and consumption and such cotton is not produced in India.
