Vaghela calls for withdrawal of import duty on cottonJuly 7th, 2008 - 7:52 pm ICT by IANS
Bangalore, July 7 (IANS) Union Textiles Minister Shankarsinh Vaghela Monday said he favours the withdrawal of import duty on cotton to enable the textile industry source cheaper cotton from other countries at affordable prices. “I have written to the prime minister for withdrawing the import duty of 14.7 percent, including 10.7 percent customs duty and four percent import tax, on cotton to benefit the local industry and exporters,” Vaghela told reporters here.
As cotton prices in the international market are lower than in India, the domestic industry should be given the benefit of importing cotton and leverage its cost advantage for higher export earnings, he said.
The textiles industry wants duty-free import of cotton to boost supplies and reduce domestic prices, which have shot up by 35 percent in the last 12 months across varieties.
While the prices of Punjab cotton have shot up by 60 percent, the Gujarat variety increased by 50-55 percent during the last one year despite record production.
Claiming the finance ministry supported his proposal, Vagehla said he hoped a favourable decision would be taken in the interest of the textile industry.
“The proposal is under serious consideration in the prime minister’s office. It will be put up to the cabinet for approval soon,” Vaghela said.
Vaghela said export realisation is expected to be higher this fiscal with the rupee depreciating over the last two months, as against the previous fiscal, when the rupee appreciated by 12-13 percent and hurt exporters in rupee terms.
He also urged the finance ministry not to levy any export duty on fabrics and garments, saying this would be counter-productive in the wake of bumper cotton production.
According to the Confederation of Indian Textile Industries (CITI), export of cotton is expected to cross 10 million bales this fiscal as against 8.5 million bales in the last fiscal. China alone accounted for 75 percent of total cotton exports, followed by Pakistan.
The textile industry was one of the worst hit by the steep rupee appreciation in the last fiscal. In addition, rising input costs have led to layoff of about 350,000 people in the past 12 months.
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