The government has exempted all cotton imports from customs duty from April 14 to September 30, 2022, with an aim to help the textile industry deal with the shortage of raw materials. The Finance Ministry said that this step will also help exports and consumers will get relief.
A jump in domestic cotton prices due to lower-than-expected crop yields had put pressure on the export competitiveness of the textile sector compared to rivals such as Vietnam and Bangladesh, which impose no import duty on cotton. Cotton imports into India attract a tax of about 11 per cent including cess and surcharge.
Higher cotton prices were also reflected in clothing and footwear inflation faced by domestic consumers, which rose to 9.4% in March, when retail inflation hit a 17-month high.