India needs to allow duty-free imports of cotton as higher raw material prices have reduced textile mills’ capacity utilization.So says the Cotton Association of India.
Scrapping the duty will help the textile industry to perform with optimum capacity. Cotton imports into India, the world’s biggest producer of the fiber, attract 11 per cent duty, which makes imports financially unviable.
India cotton is nearly 15 per cent more expensive than cotton of other origins, and the higher price has eroded the competitiveness of the textile industry and reduced capacity utilization to 50 per cent. Indian traders are struggling to export cotton despite higher production as farmers are delaying the sale of their harvest hoping for higher prices in the coming months. India’s cotton exports this year may fall short of estimates. Export enquiries are poor as Indian cotton is more expensive compared with world cotton prices.
The season started with very poor opening stock. Arrivals are not picking up as expected and domestic mills are gradually increasing capacity utilization. Cotton arrivals in November usually surpass 1.5 lakh bales a day. At present, it is at 1.3 lakh bales a day. In several areas, sowing and harvesting have been delayed.