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The Confederation of Indian Textile Industry, in a study with Gherzi Textile Organization and the International Cotton Advisory Committee as knowledge partners, has urged the government to adopt long-term policies to address fundamental constraints in the cotton sector. The study aims to improve productivity, ensure economic viability for growers, and consider the interests of the entire value chain.
The 11% import duty imposed in 2021-22 was a temporary measure to address the surplus of cotton due to the COVID pandemic, but the subsequent increase in mill use has necessitated imports, leading to a demand/supply imbalance.
India's competitors in Asia have free access to international cotton without import duties, placing India at a disadvantage. The study suggests that a stable and predictable policy is imperative to allow mills to sustain operations and fulfill market demand.
The study recommends aligning domestic cotton pricing mechanisms with international market trends, such as Cotlook A prices, while protecting farmers' interests. It also proposes that the Cotton Corporation of India consider keeping a strategic inventory for about three months, with a dynamic selling policy to meet current mill requirements.
The government is expected to review the study's recommendations and consider adjustments to its trade policies to support the cotton sector, with further discussions likely to take place in the coming weeks.