Welcoming the Union Budget for 2021-22 as growth-oriented, The Cotton Textiles Export Promotion Council (TEXPROCIL) has added that the imposition of basic customs duty (BCD) on cotton is a matter of deep concern. It has urged the government to withdraw the duty immediately to avoid adverse impact on employment and investments in the textile sector.

The Union Budget has announced Mega Investment Textiles Parks (MITRA), under which seven textile parks will be established over a period of three years. “This is a very positive step which will enable the textile industry to become globally competitive, attract large investments and boost employment generation,” said TEXPROCIL chairman Manoj Patodia in a press release.

The Budget has reduced the BCD on caprolactam, nylon chips and nylon fibre & yarn to 5 per cent. This will encourage the growth of the MMF sector especially the MSMEs, according to the chairman, TEXPROCIL.

On the direct taxes front, the Budget has reduced the time-limit for re-opening of assessment to 3 years from the present 6 years. “This is a welcome step and it will remove the uncertainty for the assesses,” the release said.

However, the imposition of 10 per cent BCD on raw cotton was surprising, said Patodia. He added that this will make imports of Extra Long Staple (ELS) cotton costly, especially Giza cotton from Egypt and Supima cotton from the US.

Patodia expressed his apprehension that the imposition of import duty on cotton will increase the domestic prices of cotton, which will now be based on the import parity price plus the BCD, which in turn will increase cost for value-added products like fabrics, made ups and garments. He also pointed out that there has been a decline in imports of cotton by a sharp 77 per cent during January-November 2020 as compared to the same period in 2019, and as such there is no case for an imposition of import duty on cotton.

He appealed to the government to withdraw the BCD on cotton in the interest of the textile & clothing sector and its orderly development, especially as India is a cotton surplus country. He further stated that if the BCD on cotton is not withdrawn immediately, it will have an adverse impact on employment and investments in the value-added textile and clothing sector.

Manali bhanushali
Author: Manali bhanushali

Manali Bhanushali