The Cotton Association of India (CAI), the apex body of the trade, has urged Commerce, Food and Textiles Minister Piyush Goyal to scrap the 11 per cent import duty on cotton with immediate effect. 

In a letter to Goyal, CAI President Atul S Ganatra said the Government must remove the duty as domestic cotton prices are 15 per cent higher than in competing nations in the global market.

“Due to this, the availability of raw materials to our textile industry at a competitive rate has been severely impacted. This has eroded the competitiveness of our value-added products in the international market and the textile industry is only working at 50 per capacity,” he said in the letter.

Currently, ginned cotton in the domestic market is offered at ₹66,750 a candy (356 kg). The weighted average price of raw cotton across the agricultural produce marketing committee (APMC) yards is currently ₹8,309 a quintal. 

ICE futures price

In comparison, cotton at the Intercontinental Exchange (ICE), New York, is quoted at 82.7 US cents a pound (₹53,850/candy) for delivery in March. On MCX, cotton for delivery in December is currently quoted at ₹31,560 a bale of 170 kg (₹66,090/candy). 

Removing the duty will go a long way in stabilising cotton prices and help the textile industry function at its optimum level, he said. 

Earlier this year, the Centre allowed the textile industry to import cotton at zero customs duty until October 31 on shortage of quality cotton. The price of the natural fibre surging to ₹1 lakh a candy was another reason to permit the imports. 

The industry had sought extension of duty-free import till December 31 but the Centre did not respond to the plea.