NEW DELHI : The reduction in import duty on cotton has failed to curb cotton prices as the duration of the exemption was not long enough, a government official told Mint, adding that the ongoing sowing season for cotton played a crucial role in the decision making.
With cotton prices at record levels, the domestic textile industry is witnessing a serious disruption due to rising input costs. Several units in the country are operating at little to no margins as manufacturers are finding it difficult to pass on costs to customers.
“The import duty cut on cotton did not have the desired impact. The exemption period should have been longer to cool prices because it takes nearly three months to import cotton and traders won’t benefit from a short term exemption.
“Since the sowing season for cotton was ongoing, the ministry of agriculture did not want the farmer’s sentiments to be impacted and opposed an exemption beyond September," the official said.
However, the government could impose a complete ban on cotton exports as the last resort to curb prices. The price of cotton per candy has crossed ₹1 lakh, doubling from nearly ₹45,000 a year back.
Tamil Nadu Chief Minister M.K. Stalin on Monday wrote to Prime Minister Narendra Modi expressing concern over rising cotton prices. Stalin in a social media post said the price rise has had a negative impact on the state where the textile industry is a major employer. “The continuing price rise of cotton and yarn has widespread ramifications for the textile industry in TN which is traditionally an employment generator. I request you to take serious note of this situation and rein in the price rise," Stalin said.