Govt scraps Customs duty on cotton imports

The Customs duty of 10 per cent on all types of raw cotton imports has been abolished along with special additional duty of 4 per cent. The government has also withdrawn the drawback benefits on exports of raw cotton. The new rules, which have been notified by the Central Board of Excise and Customs (CBEC), will be effective from July 8.

"The import duty removal will bring the domestic ruling prices of cotton in parity with the global prices of cotton," a textiles ministry official said.

Welcoming the step, PD Patodia, chairman of Confederation of Indian Textiles Industry (CITI), said it will ensure cotton availability for the domestic textiles players.

However, on the front of the removal of duty draw back on cotton exports, the industry does not seem to be too happy as the government did not heed to the demand for banning cotton exports till December 31, 2008.

RK Dalmia, president, Century Textiles and Industries, told Business Standard, "The removal of duty draw will have marginal impact in reducing prices, but sentimental affect will surely be there."

According to him, Shankar-6 variety of cotton, which was available at Rs 18,000-19,000 a candy (1 candy = 356 kg) is being priced at an exorbitant Rs 29,000 a candy.

The cotton prices have increased by more than 42 per cent since January this year, adding to cost of the textile industry.