How Slashing The Import Duty On Cotton Is Likely To Affect Spinning Mills

2. Introduction • The Australia-India ECTA will bolster textile exports significantly through preferential market access • Another important update is the removal of import duty on cotton for a period of five-and-a-half months • Right from spinning mills to cotton suppliers and spinning canmanufacturers, the news of cotton import duties being slashed opens up a plethora of benefits • Let us here take a look at how slashing the cotton import duty can affect spinning mills.

3. AVAILABILITY OF COTTON AT COMPETITIVE RATES • To stay competitive, the Indian textile sector needs the support of favourable government policies • The news of cotton import duties being slashed has come as a welcome one in this regard • It is widely expected that this policy shift will bolster the availability of cotton at highly competitive rates • As a result of the removal of the import duties, cotton imports in the domestic markets will significantly ease.

4. 2. DIMENSIONAL ACCURACY & OPERATIONAL EFFICIENCY • Randomly selected spinning can and accessories are not able to maintain the accuracy levels required for high-quality yarns • So, mill-owners should go with high-density polyethylene (HDPE) sliver cans • When spinning cans are not carefully chosen, there is a relatively high risk of sliver damages • The top sliver can manufacturers, like Jumac Cans, help their clients eliminate such risks.

5. 3. A BUFFER AGAINST COTTON PRODUCTION UNCERTAINTIES • At present, there is a 5% AIDC cess (Agriculture Infrastructure Development cess) on cotton imports • A further 5% import duty is levied as Basic Customs Duty (or, BCD) • In a country like India, where sudden & unseasonal rainfall often affects cotton production • High import duties serve as roadblocks for both domestic & international buyers, and for the textile sector as a whole.

6. 4. BOOSTING SPINNING MILL PRODUCTIVITY & OUTPUT • As cotton prices have been increasing in the domestic markets, the productivity and cash flows of spinning mills are getting adversely affected • In the last few months, the ICS-105 cotton variety witnessed a price rise of around 70% • The falling production levels at mills were impacting the demand for spinning machinery and HDPE spinning can & accessories • The removal of cotton import duties will significantly ease the liquidity problems that Indian mills are facing at present.

7. 5. DOING AWAY WITH COTTON HOARDING HABITS • The high cotton prices had, over the last few quarters, given rise to cotton hoarding tendencies among many domestic players • The frequent rises in cotton prices were threatening to stunt the growth of the Indian textile & yarn industry • With the duties no longer in place, yarn & fabric production would benefit from the lower material costs • Malaysia and Dubai are expected to grow, and India would once again be able to stand out as a force to reckon with in the global textile industry.

8. 6. VITAL STEP TO SAVE FROM CRITICAL SITUATION • The scrapping of the cotton import duties has come as a timely step for preventing a major crisis for the industry as a whole • Indian yarn & textile industry not being able to meet commitments of advance orders because of high cotton price • The uncertain political climate (for example, the conflict between Russia and Ukraine) is also causing unique problems • The slashing of the import duties on cotton will help in more effective material price management and higher operations.

9. 7. MANIFOLD BENEFITS FOR THE ENTIRE VALUE CHAIN OF TEXTILES • From spinning mill operations and sustaining day-to-day workflow efficiency levels • Fabric/yarn manufacturing • Demand for spinning can products • Removal of the high import duty of cotton will benefit the Indian textile sector • The Indian textile sector is recovering well from the pandemic-induced slowdowns • Apart from the textile sector and spinning mills, the fast-rising prices of fuel and food are causing concern as well • The import duty cut will help in stabilising the sector and helping in the post-pandemic recovery.

10. 8. Removal Of Cotton Import Duty – Truly A ‘Stitch In Time’ • With the prices of locally produced cotton zooming past the international figures, the Indian textile sector has been hemorrhaging for some time now • The policy change will offer a much sought-after breather for the domestic textile and yarn production sector • The removal of cotton import duties may not immediately bring down the prices • Going forward, things like tighter MCX trading parameters and compulsory disclosure of stocks will help matters further.

11. Jumac smart can technology is presented in a comprehensive and user-friendly way to facilitate the operations. Utilization of this smart can technology will be a core competence of the mills in the near future, adding a competitive edge. - From an expert

12. Thank You! Contact us: Jumac Manufacturing 21, C.R. Avenue, Kolkata - 700071, India

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