India Suspends Cotton Import Duty, Prices Drop by 3%
Cotton prices down 3% on import duty suspension, may slide more
The Economic Times
Image: The Economic Times
India's suspension of the 11% import duty on cotton until October has led to a 3% decline in cotton bale and yarn prices. This decision aims to enhance competitiveness for Indian manufacturers facing challenges from rivals in Bangladesh and Vietnam, while also addressing domestic supply issues.
- 01Cotton prices fell by up to 3% following the suspension of the import duty, which is effective until October 31.
- 02Prices of 29 mm cotton decreased to ₹64,300 per candy after a ₹700 cut by the Cotton Corporation of India.
- 03Yarn prices were reduced by ₹10/kg, reflecting a broader trend of declining prices due to increased cotton availability.
- 04India's share in global textile trade has stagnated at around 4%, while competitors like Bangladesh and Vietnam have seen significant gains.
- 05The decision to suspend the import duty has raised concerns among farmers, despite the government's efforts to boost domestic cotton production.
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The Indian government's recent suspension of the 11% import duty on cotton until October 31 has led to a notable decline in cotton prices, with bales and yarn prices dropping by up to 3%. This move is intended to enhance the competitiveness of Indian textile manufacturers against rivals in Bangladesh and Vietnam, who benefit from duty-free access to imported cotton. Following the announcement, prices for 29 mm cotton fell to ₹64,300 per candy, down from a peak of ₹69,200 in mid-May. Yarn prices also saw a reduction of ₹10/kg. Industry representatives noted that although international cotton prices remain high, the increased availability of cotton is expected to ease domestic prices and prevent hoarding. Concerns have arisen among farmers regarding the impact of this decision, especially as the government has launched a ₹5,659-crore Cotton Productivity Mission to boost local production. However, the limited import window and a 7% increase in the minimum support price may provide some cushion to growers during the upcoming harvest season.
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The suspension of the import duty is expected to lower cotton and yarn prices, benefiting textile manufacturers while potentially impacting farmers' earnings.
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