Ease of Doing Business for MSMEs: To develop India’s competitiveness in the global market, the central government may announce changes in the Indian apparel and textile sector’s duty structure in the Union Budget for 2023-24, as per a report by Mint citing a government official.
On account of high cotton prices in the country, the textile manufacturers said that they have been asked to reduce production days. Further, the cotton yarn export, an integral raw material in the apparel industry, may register a degrowth of 28-30 per cent in FY2023 due to weakening global demand, the report added.
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“Our thinking is to avoid inverted [duty] structure in trade and to make sure that if it is necessary to import raw material, the price should not be excessive, which will make our final product uncompetitive,” the report added, citing the official. However, it noted that higher production of cotton in the new season of 2022-23 could ease cotton prices.
The inconsistency in the demand and supply in the current fiscal had led to prices of Indian cotton skyrocket to Rs 1 lakh per candy at one point which in turn resulted in a sharp rise in imports.
Further, the imports of ‘Cotton Raw & Waste’ spiked 260 per cent to $1.3 billion between April and November 2022, compared to $361.83 million during the year ago period in 2021.
“Meanwhile, we are taking steps to boost the production of cotton by implementing newer techniques for efficient farming. Branding activity of Indian varieties of cotton, such as ‘Kasturi cotton’ is also taken up in collaboration with the industry, which will have a long-term positive impact on the industry. Free trade agreements, especially with the EU, UK and Australia, will open up large markets for Indian textile products,” the official told Mint.
Expressing concern over the import duty on cotton and seeking exemption on the same, Atul
The association further said that every year India requires around two million bales of extra-long staple (ELS) cotton but produces only around half a million. Therefore, cotton farmers should be given an additional MSP (minimum support price) to boost ELS cotton production, it asked.
Further, Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI) said, “We have been seeking removal of duty on cotton …largely on extra-long-staple cotton which India does not have…as cotton prices are under stress. And the import of this does not in any way impact the farmer… so the sensitivity for it is also not there. Raw materials like these are very seasonal, and it is very critical to the value chain. It can be a very calibrated move also.”
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In addition, the industry associations also brought focus on the tax anomaly that comes under the realms of the GST (Goods and Services Tax) council and needs correction. Last year, GST Council had adjourned the decision on increasing the tax rate on several products used in the textiles and apparel industry due to pressure from businesses.