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June 19, 2024

US Cotton Industry Urges Removal of 11% Import Duty on Short Staple Cotton to Boost Indian Textile Sector

The US-based Cotton Council International has called on the Indian government to eliminate the 11% import duty on short staple cotton, aiming to reduce costs and support the Indian textile industry. Despite a recent policy change in February, which saw the removal of a 10% import duty on Extra Long Staple (ELS) cotton, the duty on short staple cotton remains.

The duty in question was introduced on February 1, 2021, and took effect the following day. It includes a 5% basic customs duty, a 5% tax, and a 1% social welfare charge. While the policy has been amended to exclude ELS cotton, which has a staple length above 32 millimeters (mm), short staple cotton imports continue to face this financial burden.

Marc A Lewkowitz, President and CEO of SUPIMA, addressed the issue during a roundtable organized by Cotton Council International. He emphasized the importance of understanding and addressing the challenges faced by their partners in the Indian textile industry. He noted that the import duty on short staple cotton, which constitutes about 11%, poses a significant obstacle.

Lewkowitz highlighted that the duty’s imposition since 2021 has been particularly detrimental to the domestic textile industry in India. He pointed out that while the duty has been successfully lifted for American PIMA cotton and other imports exceeding 32 mm in length, the tariff on shorter staple cotton continues to strain the industry. This situation is problematic because India’s domestic production cannot meet the full demand of its vast textile sector, making imports necessary.

India’s textile industry is a major player on the global stage, yet it struggles to produce enough cotton domestically, especially the high-quality ELS cotton required for certain products. ELS cotton, known for its superior quality and strength, represents less than 1% of India’s total cotton production. As a result, Indian textile mills that manufacture high-end products such as yarns, apparel, and home textiles, rely heavily on imported ELS cotton.

The major suppliers of ELS cotton to India include the United States, Egypt, and Israel. Given the insufficient domestic production, the continued import duty on short staple cotton creates a bottleneck, impacting the cost and efficiency of the textile manufacturing process.

Lewkowitz’s appeal underscores a significant issue in the international trade policies affecting the textile industry. By removing the 11% import duty on short staple cotton, the Indian government could alleviate some of the financial pressures on textile manufacturers. This change could enhance the competitiveness of Indian textiles in the global market, ultimately benefiting the entire supply chain, from farmers to retailers.

In conclusion, the Cotton Council International and SUPIMA advocate for policy adjustments to support the Indian textile industry, which remains dependent on imported cotton. The removal of the import duty on short staple cotton is seen as a necessary step to ensure the growth and sustainability of this crucial sector.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

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