Textile units hail cotton yarn cess, exporters oppose.

New Delhi: The textile industry is divided over the government’s move to impose a cess on export of cotton yarn, one of India’s largest export items. While spinning mills are up in arms against it, garment exporters welcome the move.

Decrying any plan to curb export of cotton yarn, Cotton Textile Export Promotion Council executive director Siddhartha Rajagopal told FE that the reported move by the government came as a shocker to the exporters. “Very rarely does one see export duty being imposed on an industrial product. We oppose the move strongly,” he said.

Rajagopal added that export duties are usually imposed either to protect the domestic industry or for revenue purpose. “On this occasion, none of the factors seem to make up a case for an export tax on yarn.” The secretary general of the Confederation of Indian Textile Industry, DK Nair, concurred with Rajagopal and said at a time when the cotton yarn exports were showing marginal signs of improvement due to newer markets like Bangladesh and Korea, export tax could play a spoilsport.

However, the Apparel Export Promotion Council welcomed the move by the government. A spokesperson for the council said that the body had been requesting the government to impose a duty on exports of cotton yarn because it would bring down the prices of yarn that has risen in recent months, jacking up the costs of fabrics and garments.

The chairman of APEC Premal Udani said the government’s move to suspend duty concession of 7.5% for cotton yarn exports under the Duty Entitlement Pass Book (DEPB) scheme will bring down fabric prices to realistic levels.

Chairman of the Synthetic & Rayon Textiles Export Promotion Council GK Gupta, however, said the government had succumbed to hectic lobbying from the garment exporters. “They (garment exporters) have been lobbying with the government for far too long to impose duty on cotton yarn exports. What purpose will it serve?” he quizzed.

The prices of cotton yarn jumped nearly 50% in the past five months. The price of cotton voile fabric - the most commonly used for exports of garments - has moved up to Rs 33 per metre currently from Rs 22 per metre in November last year. Nearly one-third of garment production cost is on account of fabrics.

Source : Financial Express