The textile ministry will not recommend a ban on cotton exports, but has recommended the abolishing of import duty on cotton, enabling the Indian textile mills to import cotton at lower cost, said the textile minister Shanker Singh Vaghela.
?The Centre is considering to cut import duty on cotton imports and an announcement in this connection may come soon,? Vaghela said on the sidelines of a book-releasing function of the textile ministry here on Monday.
The textile ministry?s announcement comes after a delegation of textile industry leaders met Vaghela on June 25, demanding the withdrawal of 14% import duty (a customs duty of 10% and an additional import tax of 4%) on cotton and suspension of cotton exports till December 31, when the new cotton crop comes.The textile industry?s plea comes in the wake of prices of raw cotton touching all time high in the domestic market reportedly due to increased exports.
Vaghela, who already held discussions with the concerned ministries, said the textile ministry would not recommend a ban on the cotton exports. ?Farmers are now happy with higher cost. Farmers in Gujarat, Maharashtra, Andhra Pradesh, Punjab and all cotton growing states are happy. We will not even recommend any imposition of duty on exports. Any duty on exports would affect the cotton growers in the country. At the same time, we have recommended to abolish the entire import duty on cotton for the sake of the domestic textile industry to import raw cotton at a cheaper cost.?
Instead of pressing for a ban on cotton exports, he said the textile mills should procure and stock cotton in advance during the season when the prices are low for their forthcoming productions to avoid any hit due to price volatility in the market.
According to a recent statement by the confederation of Indian textile industry, cotton prices in India, the world?s second largest producer, gained 35% this year. The forum said farmers and traders may have held back supplies, hoping that prices will increase. Prices of the popular Shanker-6 variety of cotton touched a record Rs 28,500 per candy last month, from about Rs 21,000 in the same period last year.
However Vaghela said, ?Today the matter is that there is no cotton in the arm of the farmers. May be in the godown, may be with the middlemen, so we don?t want to support the middlemen who is unnecessarily stocking and bargaining for more money by keeping cotton and exporting when time comes.?
JN Singh, joint secretary of ministry of textiles said the country produced around 315-lakh bales against the local consumption of 240-lakh bales in 2007-08. He also said, according to provisional figures, India?s exports stood at around 85-lakh bales in the current year and it may even touch 100-lakh bales by the end of current season. According to preliminary estimates for 2008-09 season, he said the cotton output is expected to be around 325-lakh bales with an opening stock of 40-lakh to 45-lakh bales.
Meanwhile, the confederation of Indian textile industry (CITI) has appealed to its regional associations to stop production in the mills on July 9, as a mark of protest against the abnormal rise in cotton prices. In addition to the ban on exports and import duty cut, the CITI plea also includes withdrawal of 1% incentive offered for cotton on export, channelising all future cotton exports through cotton corporation of India (CCI) and other state federations and levy 5% duty on cotton exports. The forum has also demanded the margin money for working capital loans to be charged at 7% like agricultural loans.