SIMA demands fair cotton trade policy

The Southern India Mills Association (SIMA) has demanded

a fair cotton trade policy for the survival of the ailing textile industry. According to S Dinakaran, SIMA chairman, the demand for a fair cotton export policy is to create a competitive scenario in an open market and also to prevent competing countries from gaining advantage from Indian cotton. The Parliament has already passed a bill to levy up to Rs 10,000 tonnes to create a level playing field but the exporting community has started covering more volumes of cotton hoping that some export incentive would be announced for the export of cotton fibre. It has led to a rise in cotton prices across all varieties, for instance cotton prices have moved northwards by Rs 500-1,000 a candy (of 355 kg), and this is a cause of worry since price of the fine and superfine cotton varieties of yarn are dwindling in certain markets.

The SIMA chief has proposed levy of freight equalisation tax on cotton export at Rs 2,500 per tonne, as the domestic industry spent higher sums on transportation than the mills in competing countries such as China and Bangladesh, who carry the raw cotton in foreign vessels and transport the same at less than 40 per cent of the cost spent by mills in India. The Indian textile industry is already at a loss of over Rs 15,000 crores this fiscal because of high cotton and yarn costs. A levy of 10 per cent duty on branded and readymade garments and the duty-free access agreement with Bangladesh has further created roadblocks for the survival of textile sector.