The Southern India Mills’ Association has sought a rollback of the 10% customs duty on cotton imports announced in the Union Budget, as it would escalate the cost of garments and result in higher import of garments, especially from countries such as Bangladesh and Sri Lanka.
Ashwin Chandran, chairman of Southern India Mills’ Association, said that India imports mainly extra-long staple (ELS) cotton, organic cotton, contamination-free cotton and sustainable cotton. The production of these varieties is either nil or meagre in India.
Indian mills consume about 15 lakh bales of ELS cotton annually as against the domestic production of about five lakh bales, Mr. Chandran said.
India is a major importer of Pima and Giza cotton varieties.
The country imports about 33% of total Pima exports from the U.S. and 45% of Giza cotton from Egypt.
Several garment exporters in the MSME segment do not have capacities to make yarn from such premium cotton varieties and buy yarn from the domestic mills.
Such exporters will not get Advance Authorisation Scheme benefits that the integrated mills that import cotton can avail of.
Thus, Indian products made of imported cotton will become expensive in the international market, which will give competitors an edge.
In the case of the domestic market, the cost of garments made of imported cotton will increase, leading to higher import of garments, he said.