The Indian government on Saturday announced a five-month duty exemption on all cotton imports into the country, effective from June 1 to October 31. The move aims to cool down rising cotton prices and ensure that the domestic garment and textiles industry remains robust.
Government Notification and Industry Context
The exemption was announced via a notification from the finance ministry, responding to industry demands for adequate cotton supply at reasonable costs. The ministry stated that the temporary duty exemption is expected to reduce input costs across the textile and apparel sector, providing targeted relief to manufacturers and consumers while keeping the interests of domestic farmers in mind.
Cotton is a dominant input for India's textiles exports, one of the largest items in the export basket. The textile ministry noted that the measure, implemented during the cotton off-season, will ensure adequate availability of cotton, support micro, small, and medium enterprises (MSMEs), moderate input costs, and strengthen the competitiveness of Indian textiles while safeguarding farmers' interests and ensuring market stability.
Industry Reactions
The industry welcomed the decision. Mithileshwar Thakur, secretary general of the Apparel Export Promotion Council, said: "This will moderate cotton prices and thus lead to reduction of input costs across the textile and apparel sector, thereby providing much-needed relief to MSMEs in the downstream industry which have been facing challenges due to the sharp increase in cotton and yarn prices. This timely intervention will also help the apparel industry retain its export competitiveness in cotton-based products."
The Confederation of Indian Textiles Industry (CITI) highlighted that the previous 11% import duty on cotton was a major hurdle for the Indian textile and apparel sector, as major Asian competitors had duty-free access to cotton. CITI chairman Ashwin Chandran stated: "Cotton imports are largely quality and specification-driven, catering to specialised requirements and back-to-back export orders. They do not displace domestic cotton."
Overall, the duty exemption is anticipated to have a positive impact on the performance of the domestic textile industry, especially small and medium enterprises, ensuring better availability of cotton in the market and helping India retain its competitive edge in global textile exports.
