Import duty waiver on cotton to boost Gujarat textile sector competitiveness

Ahmedabad: Gujarat’s textile industry has welcomed the Centre’s decision to suspend the 11% import duty on cotton till Oct 30 and claimed that it will improve the sector’s competitiveness at a time when rising raw material costs and subdued demand have weighed heavily on profitability.Industry players said cotton prices have risen sharply over the past few months, reaching a peak of Rs 68,500 per candy, putting pressure on spinning mills, fabric manufacturers and garment exporters. With raw material accounting for a significant share of production costs, the duty waiver is expected to ease cost pressures across the textile value chain.“The duty waiver will improve cotton availability and help keep prices under control at a time when domestic cotton prices have risen substantially. Imports are largely limited to extra-long staple (ELS) cotton and are not a substitute for Indian cotton. The move will help rationalise production costs for textile manufacturers and exporters, who have been facing margin pressure due to rising raw material costs,” said Chintan Thaker, chairperson, Assocham Gujarat State Council.“Better-quality fibre can enhance product quality and enable companies to command improved realisations, especially in segments catering to global brands and premium consumers. The measure is also expected to support export growth by improving the competitiveness of Indian textile products in international markets,” he added.Industry stakeholders believe access to duty-free cotton imports will help stabilise raw material supplies and prevent the seasonal spike in cotton prices typically witnessed towards the end of the cotton season.“The impact is already visible. Raw cotton prices have corrected by nearly Rs 4,000 per candy after the duty waiver announcement. The moderation in cotton and yarn prices is expected to lower input costs for mills and improve operating margins, particularly for export-oriented manufacturers competing with suppliers from Bangladesh, Vietnam and China,” said Rahul Shah, co-chair, textile committee, Gujarat Chamber of Commerce and Industry (GCCI).The duty waiver comes at a time when the sector is grappling with higher costs of cotton, yarn, fuel, dyes and intermediates, even as demand remains uneven in key export destinations.The spinning sector is upbeat with the removal of import duty on cotton. Jayesh Patel, senior vice president, Spinners’ Association Gujarat (SAG), said, “Spinning mills have received good export orders from China and Bangladesh. However, Indian cotton prices were higher compared with the international market, and with the removal of import duty, cotton prices have come down. Cotton yarn prices reached a high of Rs 315 per kg but came down to Rs 290 before the duty cut. We believe with the duty cut, the Indian textile industry will become more competitive globally.”