The Centre has extended the window for duty-free imports of cotton by a month, amidst delayed monsoon in some of the growing regions. In a notification issued on Monday, the Centre has extended the deadline to import raw cotton until October 31, 2022, from the earlier deadline of September 30, 2022.
The decision comes as a relief for the textile and yarn industries, who would be able to source cheaper cotton for an extended period of one month.
Notably, the industry had been demanding duty-free import of cotton until December 31 amidst spiralling domestic prices. But the government seems to have also considered the interests of the growers, who would harvest the crop by end of October or early November.
India's cotton crop arrival starts around October-November.
An extended window till December would have hampered the domestic prices and hurt the cotton farmers. But a moderate relaxation in the deadline until October 31 is likely to protect the interests of both the stakeholders - the industry and the farmers.
The cotton import duty was imposed at the rate of 11 per cent in February 2021, when prices of the fibre hovered at around ₹44,500 per candy (of 356 kg each).
But in April this year, the Centre had allowed duty-free imports after the historic run of domestic prices to a record levels of ₹1 lakh per candy ginned cotton on lower crop projections. The prices, however, have softened by about 10 per cent in the recent weeks, tracking global sentiment.
ICE Cotton Futures for the October contract were quoted at 101 US cents per pound (₹63,350 a candy) on Tuesday. The contract had hit a peak of 140 cents on May 17 amidst a global supply crunch of the fibre. India's imports cotton from large growers such as Brazil, the US and Egypt.