Clothing exporters fear losing premium market

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Budget announcement on increase in cotton tariffs may cast a shadow over India’s advantage in high-end / high-end clothing exports to the world, according to cotton stakeholders .

According to trade sources, this is mainly due to the additional cost of imported cotton – mainly extra-long fibers (ELS) – used in the manufacture of high-value textiles and clothing, which are exported around the world under premium labels. . ELS grade cotton from Giza is imported from Egypt, while Pima cotton is sourced from the United States. Cotton stakeholders have also expressed concerns about the loss of international markets, particularly the United States and Europe, to neighboring competitors, Bangladesh and Pakistan as well as Vietnam.

In her budget speech, Finance Minister Nirmala Sitharaman said that in order to “benefit farmers, we are increasing the tariffs on cotton from zero to 10 percent and on raw silk and silk threads from 10 percent. at 15%.

The Cotton Textiles Export Promotion Council expressed surprise at the government’s decision. The Council expressed concern at the higher cost of value-added products, including fabrics, apparel and clothing, due to rising tariffs.

The Southern India Mills’ Association (SIMA) also demanded a rollback of the decision shortly after the budget.

Net imports

According to data from the Cotton Association of India (CAI), India’s cotton imports for the year 2019-20 (October to September) were projected at 15.50 lakh bales, while for the year 2020 -21, they are estimated at around 14 lakh bullets. , of which 4.5 lakh bales of cotton have been imported as of December 31, 2020. India is the largest cotton producer in the world with production for 2019-2020 projected at 360 lakh bales and 358.50 lakh bales for the current year.

Surplus market

While the country is a surplus cotton market and a net exporter of cotton, the government’s decision to impose an import duty on cotton surprised the industry.

“This is not a healthy move. Each year, we import around 14-15 lakh bales, which is about 5% of our total production. It is imported for a special end use – namely clothing exports to high added value. Indian products already face the highest import duties in our destination markets such as the United States. With this import duty, all high value added export orders will go to our competitors, Pakistan, Bangladesh and Vietnam, ”said J Thulasidharan, President of the Indian Cotton Federation. Activity area.

According to trade insiders, cotton textiles / apparel using 51 percent or more Pima cotton may qualify for Supima lable, which offers higher prices and premiums in the US market as well as other apparel markets important.


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