The Government has said in Rajya Sabha (Upper House) that 10 per cent import duty on cotton will continue as this move was aimed to benefit domestic cotton producers.
The announcement has come as a big disappointment to textile and apparel industry as time and again various trade bodies have been requesting the Government to remove this duty.
The duty was announced in the Union Budget 2021-22.
As per a report of UNI, Finance Minister Nirmala Sitharaman said in a written reply that this duty has been imposed to benefit the domestic cotton farmers, which in turn would help in higher domestic value addition and reduce import dependence.
The Minister added that apparel exporters would not be affected as exporters may avail benefit of schemes like advance authorisation, duty drawback, EoU and SEZ.
Further, the RoSCTL scheme for apparel and made-ups has also been extended till March 2024. Besides, incentives under various schemes are also being provided to the apparel sector.
“The cotton import has surged significantly in last few years, even though India is the largest producer of cotton in the world. All varieties of cotton, including those which were produced in India, were being imported in large quantities, which has impacted the Indian farmers adversely,” the Minister said.
The industry has the logic that the Government might receive around Rs. 360 crore per annum as additional revenue on account of the import duty on cotton, but will in turn imperil annual GST revenue of around Rs. 1,800 crore.
More importantly, the import duty will not benefit the Indian cotton farmers owing to the negligible volume of imports and the non-availability of such speciality cottons in India at the moment.