Stalin writes to Goyal to rein in cotton, yarn prices

Chennai: In an effort to control the cotton and yarn prices, Tamilnadu Chief Minister M K Stalin has urged Union Textiles Minister Piyush Goyal to remove 11 per cent import duty and extend five per cent interest subvention to spinning mills.

In a letter to Goyal, copies of which were released to the media here, he said the apparel manufacturers has submitted a petition regarding the grave situation of cotton and yarn price volatility and its impact on the prices
of fabrics and garments.

Sating that textile industry was the second largest employment provider in the State and Tamilnadu accounts for 1/3rd size of the textile business of the country, he said the present crisis has led to mass cancellation of export orders and hardships in fulfilling long term export commitments.

‘If this situation is not reined in, large number of apparel and home textile units may soon become unviable resulting in closure and consequent large scale unemployment and industrial unrest’, he said.

He pointed out that one of the major reasons for the cotton price volatility is due to the imposition of five per cent Basic Customs Duty (BCD), five per cent Agriculture Infrastructure Development Cess (AIDC) and ten per cent Social Welfare Cess imposed on these components in the Union Budget 2021-22 which amounts to imposition of an overall import duty of 11 per cent.

Stalin said another reason for spurt in cotton prices is the bulk discount offered by the Cotton Corporation of India (CCI) to the traders who procured almost 70 per cent of Minimum Support Price (MSP) cotton auctioned by CCI at a lower rate during the cotton season due to availability of 90 days free period and thereafter speculated the market.

Taking these factors into consideration, the Chief Minister urged Goyal to direct the Ministries concerned to intervene and take policy measures to remedy the situation, protect the Textile industry and prevent loss of jobs.

Stalin wanted removal of 11 per cent import duty levied on cotton to avoid further speculation in the coming months, revamp the commercial terms and conditions prescribed by the CCI for e-auction of cotton by reducing the minimum lot size to 500 bales which is sustainable for the MSMEs.

He also said yarn manufacturers must be given priority in procurement of cotton over traders, besides urging Goyal to extend five per cent interest subvention to the spinning mills towards procurement of cotton during peak season (December to March).

 

NT Bureau