After the government?s announcement to scrap import duty on raw cotton and withdrawal of the duty drawback benefit on export, raw cotton spot prices in the domestic market have come down by nearly Rs 700-1,000 a candy to Rs 27,700 per candy for Shankar-6 variety on reports that few importers have booked some parcels of Tanzanian cotton at 75 cents per pound.
The government has scraped the 10% custom duty on raw cotton imports along with 4% special additional duty. In addition, government has also withdrawn 1% duty drawback benefit on export of raw cotton effective from July 8, 2008.
?With the advantage of lower international prices and zero import duty, importers have booked some small parcels of Tanzanian cotton (30mm) at 75 cents for immediate shipments ? July/August. We expect more imports of long and extra long staple varieties from Tanzania, Egypt, CIS and American Pima till October 2008,? a leading dealer said.
Prices may come down further in the next few days on increased supplies of quality cotton as there is a shortage of good quality cotton and fresh arrivals from North India will start only in next October. Till that time, such imports will fill the gap, a local trader said.
The country has so far imported about 6.50 lakh bales in the current season. ?New York prices have come down sharply in past two-three days. Hence, there is import parity in the market and I expect more deals in the days to come. There are some enquiries at 78 cents for Tanzanian and Nigerian cotton and 80-81 cents for West African cotton (mainly 29mm). However, local importers prefers west African cotton rather than other two countries,? a local agent said.