Centre likely to remove 11% duty on cotton as prices soar amid war, Pg13

Key Highlights:

• The Union government is likely to remove the 11% duty on cotton until October 2026 to aid textile manufacturers.
• Cotton prices have surged by 10-15% in the last month due to hoarding and increased demand.
• India relies on imports for about 15% of its raw cotton and 20% of its yarn.
• AEPC requested the government to eliminate the duty due to high cotton prices and rising input costs.

Detailed Insights:

• The duty was previously removed between August and September 2025 due to steep US tariffs impacting manufacturing and investments.
• Rising domestic fuel prices, influenced by global crude oil prices, have contributed to increased input costs for textile manufacturers.
• India's cotton production has stagnated due to lack of new seeds, modern irrigation, and pest/disease issues.
• Removing the import duty aims to enhance the competitiveness of the Indian apparel industry in global markets and with FTA partner countries.
• Some investments are returning to India as manufacturers diversify away from Bangladesh, with potential European investments.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers.
• Import Duty: A tax imposed on goods imported into a country.
• Hoarding: The practice of accumulating and storing goods, often leading to artificial price increases.