*Nagpur* : The window for duty-free cotton imports expired on Wednesday, with no govt notification regarding an extension. As a result, an 11% duty will apply to cotton imports from January 1, unless a fresh order is issued.
While textile players reported rising prices for processed cotton (lint), farmers in Vidarbha continued to sell raw cotton below the minimum support price (MSP). Market rates ranged from 7,500 to 7,700 per quintal, compared with the MSP of 8,110, say market sources.
Sources added that while trade and industry lobbied to maintain the duty exemption for at least a quarter, farmers' associations submitted representations supporting the duty. While exemption allowed cheaper imports for textile companies, it pushed down raw cotton prices for farmers.
In August, following tariff tensions with the US, India removed 11% import duty on cotton. According to US-based International Cotton Advisory Committee (ICAC), India imported 36 lakh bales of cotton until mid-September. Brazil accounted for largest share at 23%, followed by US at 20% and Australia at 19%.
Absence of further duty-free orders has left the textile industry concerned. Reimposing duty has reduced raw cotton prices for farmers to as low as 6,700 per quintal. This season, farmers relied on MSP procurement by Cotton Corporation of India (CCI), which purchased 61.5 lakh bales by December 30. Registration deadline for farmers to sell at MSP was extended to January 16 from original date of Dec 31.
"Domestic cotton rates reached 58,500 per bale, and imports have become costlier by 4,000 due to tariff war, affecting global competitiveness," said Prashant Mohta, MD of Gima Tex Industries, a textile unit in Vidarbha.
