Include cotton yarn in interest subvention scheme: Texprocil

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Published: August 2, 2019 1:46:01 AM

The Cotton Textiles Export Promotion Council (Texprocil) has urged the union government to include cotton yarn in the interest subvention scheme.

Considering the large scale investment in the spinning sector and sluggish demand in the domestic markets, exports are the only avenue to ensure uninterrupted production and capacity utilisation.

The Cotton Textiles Export Promotion Council (Texprocil) has urged the union government to include cotton yarn in the interest subvention scheme.

With a marked decline of 33% in the exports of cotton during Q1 to 226 million as compared to 338 million in the same quarter last fiscal, the government should also rebate the embedded taxes like agricultural cess, mandi tax, power and fuel surcharge which incurred production process, said KV Srinivasan, chairman, Texprocil.

Month-on-month decline from 90 million kgs in April 2019 to 77 million kgs in May to 59 million kgs in June, is a matter of deep concern. In fact, the level of 59 million kgs is the lowest monthly export in the last five years, he added.

The cotton yarn sector has been one of the pillars of the Indian textile industry and is also highly modernised and technology driven and also provides sustainable income to farmers. The steep fall has been caused by a variety of reasons including decline in exports to leading markets like China, Bangladesh, South Korea and the duty free access given for import of cotton yarn by China to countries like Pakistan and Vietnam from 1st April 2019.

Considering the large scale investment in the spinning sector and sluggish demand in the domestic markets, exports are the only avenue to ensure uninterrupted production and capacity utilisation.

According to Srinivasan, even though cotton yarn is a value added product, it has been excluded from the export benefits like interest subvention, MEIS and the ROSCTL schemes. In view of all these factors, the government must include cotton yarn in the interest subvention scheme and also rebate the embedded taxes like agricultural cess, mandi tax, power and fuel surcharge which incurred in the production process.

The ROSCTL scheme which rebates these levies should be extended to cotton yarn sector at the earliest, he added.

This will ensure that only products are exported and not taxes. This will also provide the much needed impetus in the context of rising cotton prices & appreciating Rupee which are eroding competitiveness. In case the current trends of declining exports continue in the next quarter, it will lead to closure of several spinning units in the near future, resulting in layoffs, he said further.

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