The Hindu Business Line : Cotton prices likely to fall on zero import duty

Chennai, July 9 Cotton prices in the domestic market are set to decline with the Union Government scrapping the 14 per cent duty on import of cotton yielding to the long-time demand from the textile industry.

Welcoming the decision of the Centre, Mr D.K. Nair, Secretary-General of the Confederation of Indian Textile Industry (CITI), said: “This announcement will have a psychological impact and prices of cotton will naturally come down.” The cotton prices have gone up by over 40 per cent since January this year, adding to the woes of rupee-hit textile industry.

“Moreover, piled up stocks with traders will come out as is happening now in international markets,” he said. He, however, said the move would not adversely affect cotton growers since no stocks were left with them.

With the import duty being nil, imports are likely to go up. India now imports cotton from the US, Brazil and South African nations. Mr Nair said there was a possibility of imports going up the coming season starting October with the abolition of customs duty.

Cotton imports have declined from around 17 lakh bales (of 170 kg ) in 2002-03 to 5 lakh bales in 2006-07. Imports are expected to be around 6.5 lakh bales this season.

In the latest meeting of Cotton Advisory Board (CAB), cotton exports have been estimated at 85 lakh bales during the current season ending September. However, exports could be well above 100 lakh bales. Exports totalled 58 lakh bales in 2006-07 against 47 lakh bales in 2005-06.

Cotton production was at a record high of 270 lakh bales in 2006-07 cotton season and is likely to touch 315 lakh bales in the current season.

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