SIMA to appeal the Prime Minister for withdrawal.
Coimbatore: Cotton based Indian textiles and clothing industries which are employing over 110 million people has been facing several challenges in the last 4 years which got aggravated with the unprecedented distress caused by COVID-19.
Realizing the need for sustaining the global competitiveness of the highly labour intensive textile industry, the Government of India has been taking a series of policy interventions to enhance the global competitiveness including withdrawal of anti-dumping duty on PTA, Acrylic Fibre, rejecting the proposed ADD on PSF, MEG, etc., including the recent reduction of BCD on nylon.
India has been globally competitive only in the cotton textile manufacturing, thereby accounting for 80% of its total exports. Cotton and cotton waste which is currently under nil rate of import duty is being subjected to 10% import duty through the budgetary announcement comprising of 5% Basic Customs Duty and another 5% Agriculture Infrastructure and Development Cess (AIDC) on cotton and 10% BCD on cotton waste has come as a severe blow for the ailing cotton textiles and apparel industry. This new import duty comes into effect from 2nd February 2021.
According to the press release issued by Ashwin Chandran, Chairman, The Southern India Mill's Association (SIMA) "We have appealed to the Hon’ble Prime Minister to immediately withdraw the levy of 10% import duty on cotton and cotton waste to sustain the global competitiveness of Indian textiles & apparel industry and prevent job losses for several lakhs of people, prevent fall in the exports and also curb cheaper imports of value added products from the SAFTA countries like Bangladesh, Sri Lanka, etc."
Ashwin Chandran futher stated that " This levy of 10% duty will not benefit the cotton farmers as the normal import of 12 to 14 lakh bales per year accounts only around 3% of Indian cotton production and the consumption is not produced in India. But this is essential to sustain the share of value added markets of India both in global and domestic markets."
He further said that "after the introduction of BT cotton that accounts over 97% of the cotton produced in the country, the cotton textile industry has to import ELS cotton, organic cotton, contamination free cotton to the tune of 10 to 12 lakhs bales per year to meet the demands of the global customers and also the value added made-ups and apparel segments of domestic market. With the country already being flooded with cheaper imports of readymade garments from SAFTA countries the industry is already in crisis."
SIMA Chairman Ashwin Chandran "While appreciating the government policy of making any raw material available at competitive rate by removing the anti-dumping and other import duties, the sudden announcement of levying import duty on cotton has come as a rude shock for the industry that is just coming out of the ill effects of COVID-19."
He further stated that "the MMF textile value chain’s growth was curtailed due to import parity pricing policy being adopted by the indigenous fibre manufacturers two decades ago and the recent removal of ADD on PTA has created a level playing field for the polyester segment. We fear that the multinational cotton traders and the major traders would adopt the same model and the competitiveness of predominantly MSME based cotton textiles & apparel industry will be affected.
MSME and decentralized nature of the yarn, fabric and garment manufacturers in the country will not be in a position to take advantage of Advance Authorization Scheme and such scheme would benefit only the vertically integrated units that account less than 10% of the exports.
Government had already withdrawn the import duty on cotton during July 2008 consequent to the severe recession faced by the industry and also a Nation-wide bandh by the entire cotton textile value chain."
He further said that "the multinationals used the tax to cover major volume of cotton and export and thereafter the industry had to import cotton at higher price and thereby the foreign exchange also got affected."
SIMA Chairman Ashwin urged the Hon’ble Prime Minister to withdraw the 5% BCD and 5% AIDC and also 10% BCD on cotton waste to sustain the global competiveness of the cotton textile value chain and make Aatmanirbar Bharat vision, a reality.
He then thanked the Government for announcing the Production Linked Incentive Scheme by allocating Rs.1.97 lakh crores including Rs.10,683 crores for textile industry, giving thrust to develop the global competitiveness in the MMF textile value chain.