INDIA: Duty Hike On Cotton Have 'Deleterious Effect' Says ICFM

The Indian Cotton Mills' Federation (ICMF) has denounced the doubling of import duty on raw cotton to 10 per cent saying that it will have a "deleterious effect" on the domestic textile industry.

The federation also said, "The decision will hasten the pace of closure of mills and lead to massive loss of employment and exports."

In a statement, the ICMF Chairman, Dr Rajaram Jaipuria, said that the Government's move has not taken cognisance of the recent review of the cotton situation by the Cotton Advisory Board, which has assessed cotton imports this year at 16 lakh bales, down from 22 lakh bales last year.

Moreover, domestic cotton production is pegged at 156 lakh bales, 16 lakh bales higher than that of the previous year.

"One of the reasons for the surge in imports last year was the low domestic production, which is not happening this year. Against this backdrop, it is very difficult to gauge the rationale of the proposed hike in import duty," Dr Jaipuria said.

According to him, the domestic industry was "compelled" to import raw cotton mainly on account of the high levels of contamination in Indian cotton, which has been steadily eroding the competitive edge of the Indian textile sector.

Also, while exporters of cotton yarn can import cotton against advance licences in spite of cumbersome procedures, direct imports are not feasible for exporters of fabrics, made-ups and garments.

"The steps that have to be taken for protecting the interest of the farmers are not tinkering with the import duty but proactive measures such as introduction of genetically modified cotton strains, which will increase the yields and at the same time reduce the cost of cultivation by substantially reducing the expenses on pesticides," the ICMF statement added.

According to Dr Jaipuria, the textile sector was already "choked", with 407 mills having shut down already and several more on the verge of closure.

January 10, 2002

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Added: January 10, 2002
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