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SIMA
deplores hike in import duty on cotton
E-Tex
Staff - Coimbatore
The Southern India Mills’ Association (SIMA) has deplored the
recent hike in import duty from five per cent to 10 per cent as
a retrograde step. The increase in the excise duty on cotton would
only burden the textile industry which is already ailing, said Mr
Velayutham, chairman of SIMA in a statement.
The government has acted in haste and has resorted to increase the
import duty owing to pressure from the farmers’ lobby. This
ad hoc decision in the middle of the cotton season would only send
wrong signals to the market and affect the price sentiments, Mr
Velayutham added. “Market forces should determine the price
level of any commodity and cotton can be no exemption. By increasing
the import duty, the government is only artificially trying to affect
the price sentiments that could be counter-productive in the long
run,” pointed out Mr Velayutham. Cotton-based spinning industry
had resorted to cotton imports only due to non-availability of quality
cotton in the domestic market. As the international prices are firming
up, the spinner would be put in a disadvantageous position owing
to doubling of the import duty on cotton, he further stated. “Increase
in the cost of cotton would push the spinners towards consumption
of synthetic fibres such as polyester, thereby affecting the offtake
of cotton,” he warned.
The Cotton Advisory Board has estimated that during the cotton season
2001-02, cotton imports could be around 16 lakh bales as against
22 lakh bales the previous year. It has also estimated that cotton
exports during the current season could be around two lakh bales
as against 0.60 lakh bales exported the previous year. According
to SIMA chairman, this data reflects that cotton imports are declining
and exports are picking up. In such a scenario, there is no justification
for the government to increase the import duty on cotton. Mr Velayutham
added that instead of resorting to ad hoc increase, the government
should chalk out a long-term strategy in order to facilitate the
industry to draw its business plan.
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