India's cotton imports to rise as govt extends duty-free deadline

The Indian government said in a notification that it has extended the deadline by a month as the sowing of the cotton crop got delayed in some regions due to patchy monsoon rainfall. India had allowed duty free imports in April this year after local prices jumped to a record high because of a drop in the production and rally in global prices.

The textile industry in India can expect big relief from the latest government decision as global cotton prices had seen more fall compared to domestic prices. Domestic cotton prices have fallen to around ₹80,000-90,000 per candy of 356 kg. In comparison, ICE cotton prices had seen steep fall and ICE October 2022 contract noted at 99.89 US cents per pound on Tuesday which translates to ₹62,700 per candy (₹176 per kg). If the prices difference is maintained in further months, cotton imports are expected to rise. This will improve availability of cotton in domestic markets.

Market sentiments are already feeling pressure due to steep fall in global prices, and domestic cotton prices have also declined to some extent, but lower availability is restricting free fall. Spinning mills and weaving industry is also cautious for possibilities of further decline in prices. If duty free imports increase, domestic prices may feel more pressure.

However, experts and industry stakeholders feel that the one-month duty-free import extension can provide only temporary relief, as the government has not removed import duty forever. Earlier, textile industry representatives had urged textiles and commerce & industry minister Piyush Goyal for extension of duty-free import till December 2022. But the government had agreed to extend duty-free provision further only if it is needed. Industry sources said that such approach is not helping manufacturing units to plan for longer period.

Fibre2Fashion News Desk (KUL)