The Indian textile sector alleges that domestic cotton prices are higher because the monopoly suppliers in the domestic market have stocked domestic cotton and keep prices high as imported cotton is subjected to 11 percent import duty.
The Indian Cotton Federation, on feeling the plight of the local textile industry that is buying Indian cotton at 15 percent higher than global rate; has appealed the Union government for immediate waiver of the import tax on cotton.
J. Thulasidharan, president of the Federation, in a letter to the Indian government has lamented that due to high local prices of cotton the textile industry is operating at 50-60 percent capacity. Its export competitiveness is eroding to the high cost of its basic raw material. Import of cotton is not possible due to high import duty and other import charges.
He said that due to little pricing disparities, the the Indian industry is losing business in the global market. The Indian textile industry had no issue with import duty on cotton in the past because the commodity was available at globally competitive rates to the spinners. The import duty was a deterrent for industry in case it tried to exploit the farmers by offering lower rates. Now it is the other way round. The industry is being exploited by the growers impacting exports of the entire value chain of textiles.