Govt mulls cutting cotton import duty to ease textile sector stress

The Ministry of Textiles is considering reducing or eliminating customs duty on cotton imports, in consultation with agriculture and finance ministries, to ease rising costs for industry, alongside reviewing duties on key inputs and export incentive schemes for the sector

New Delhi: The government is looking at the elimination or reduction of the customs duty levied on cotton imports, an official said on Tuesday, stressing that concerned ministries will decide in this regard. The textile industry has been urging the government to remove 11 per cent customs duty on imports of raw cotton amid rising prices to mitigate the cost pressure on domestic companies and protect the sector.
Addressing an inter-ministerial briefing here on the developments in West Asia, Bipin Menon, Trade Advisor, Ministry of Textiles, said, “We are working with the Department of Revenue to see whether a reduction can happen”.

He said that all three related ministries, including agriculture, textile and finance (Department of Revenue) are looking at customs duty reduction or elimination on cotton.

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“There is also a discussion on whether we can do it temporarily for the lean season. The ministries of Agriculture, Textiles and the Department of Revenue will together take a decision on this,” Menon informed. The ministry is also seeking the removal of the 2.5 per cent customs duty on rayon-grade wood pulp, an input for the viscose chain.

“We have also written to the Department of Commerce on the export remission schemes. There were some suggestions on the RoDTEP (Remission of Duties and Taxes on Exported Products) and the RoSCTL (Rebate of State and Central Levies and Taxes).

“So, we have taken it up with the office of DGFT (Directorate General of Foreign Trade). Some of the suggestions include the increase of rates, the restoration of rates for the period where the RoDTEP rates were cut down to 50 per cent, and these are being examined by the appropriate authorities,” Menon said.

He said that the Textiles Ministry has been regularly monitoring the developments in West Asia and has conducted several stakeholder consultations on textiles and handicrafts. Primarily, we are talking to export promotion councils, the regional cluster associations, and a lot of domestic associations, Menon noted.

“We are also in touch with DG Shipping, authorities, and the Ministry of Petroleum & Natural Gas. We are also circulating the advisories issued by DG Shipping to our stakeholders and discussing with them to look at alternate ports, including Jeddah, for example, to supply to the Middle East. So, these developments are coming as and when the situation is evolving,” he added. On ensuring fuel and natural gas to the industry, Menon said the textile ministry has been in touch with some of its stakeholders.

“In case there is any shortfall, the monitoring cell would also be looking at interfacing with GAIL to look at, for them to purchase gas in the spot market,” he said.

Regarding discussions around reduction in customs duties for inputs and intermediates for the textile sector, Menon said, “We discussed with the Department of Revenue … We’ve also been pressing for the elimination of duty on rayon-grade wood pulp, which is an input for the viscose segment, and also inputs for the glassware manufacture, where I think there are a lot of inorganic chemicals, which are inputs for that”.