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Call to end 11% cotton duty in India by US council

Call to end 11% cotton duty in India by US council

By Jamie Martin

The US Cotton Council International has formally requested the Indian government to abolish an 11% import duty on short staple cotton. This duty, introduced in February 2021, is composed of a 5% basic customs duty, a 5% tax, and a 1% social welfare charge.

The council's aim is to reduce costs for the Indian textile industry, thereby fostering better trade relations and market conditions for US cotton exporters.

Currently, cotton with a staple length below 32 millimeters remains subject to this duty, while the import duty on Extra Long Staple (ELS) cotton, which is above 32 mm, was removed.

This discrepancy has caused concerns among US exporters, as articulated by Marc A Lewkowitz, President and CEO of SUPIMA. He highlighted that while the duty on American PIMA and longer staple cotton was lifted, the duty on shorter staples continues to hinder the competitiveness of US cotton in the Indian market.

India, a major player in the global textile industry, does not produce enough cotton to meet all its domestic needs, particularly in sectors requiring high-quality cotton like ELS. The US, Egypt, and Israel are key suppliers of this quality of cotton to India.

The continuation of the import duty on short staple cotton impacts not just the US exporters but also the Indian textile mills that rely on imported cotton for manufacturing a variety of textile products.

By advocating for the removal of this duty, the US Cotton Council International hopes to alleviate some of the cost pressures on Indian textile manufacturers, making US cotton more appealing and supporting a more balanced trade relationship.

Categories: National

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