Budget proposes 10% customs duty on import of cotton

Finance Minister Nirmala Sitharaman announced in the Union Budget a levy of 10% customs duty on cotton and an increase in the customs duty on raw silk and silk yarn from 10% to 15% to benefit farmers.

Also, in a move to rationalise duties on raw material inputs for man-made textiles, the Budget proposed to bring nylon chain on a par with polyester and other man-made fibres by reducing the basic customs duty on caprolactam, nylon chips, nylon fibre and yarn to 5%.

The Minister further announced that in addition to the Production Linked Incentive Scheme, Mega Investment Textile Parks would be set up with plug and play facilities. As many as seven parks would be established over three years.

These would enable the industry to become globally competitive. Union Textiles Minister Smriti Irani tweeted that the textile park scheme would be a game changer for the Indian textile industry.

With the emphasis on state-of-the-art infrastructure, the scheme would create a level-playing field for domestic manufacturers in the international market.

The textile sector will have a total budget outlay of ₹3,631 crore for 2021-2022. Some areas that will see a hike in allocation are the Amended Technology Upgradation Fund Scheme, handloom development and textile infrastructure. The industry pointed out that Indian textile mills imported 10 lakh to 12 lakh bales of cotton a year, mainly extra long staple and organic cotton.

Manoj Patodia, chairman of the Cotton Textiles Export Promotion Council, said the levy on raw cotton imports would increase domestic cotton prices and thus have an adverse impact on the entire value addition chain.