In view of the decline in export and weak prospects for this year’s crop, the Indian cotton sector sought to benefit from incentives and a tariff cut on imported cotton so as to strengthen its troubled textile industry. The decrease in export of clothing for the first quarter of FY23 was noted, and several mills were facing difficulties due to lack of orders.
In spite of an increase in cotton arrivals on the market, products originating from India continue to be more expensive than imported products because of increased production costs.
Exports of readymade clothes fell by approximately 18 % to US$ 3.69 billion in the April to June period of FY24, compared with a year ago. “The cost of production is higher, so our products are no match for it.” “We have to deal with issues such as raw materials, costs of capital, interest rates and so on,” Dr. K Selvarajan, secretary general of the Southern India Mills Association SIMA said. Exports of RMG amounted to 16.2 billion in FY23, which represents a marginal increase from the previous year.
Although cotton is available at a lower price abroad, the 11% tariff on imports has made it costly. With cotton prices rocketing upwards to a staggering 1,00,000 rupees per candy, the government granted an exemption on import duties until October last year. The 15 lakh bale import goal for this year may be challenging to reach due to high import taxes.
This year, the sector argued to exempt itself from duty in order to reduce costs due to a decrease in demand. The owner of a spinning mill in Andhra Pradesh, who asked not to be named, stated that nine out of the state’s 60 spinning mills have closed so far and another ten to fifteen would close soon. He believes that the mills will be hard to survive if the government does not provide incentives, for example subsidies or a moratorium on loans and reduction of import duties.
