‘Heavy duty' on raw cotton exports planned
The Centre has decided to suspend the duty concession of 7.5 per cent available to cotton yarn exporters under the Duty Entitlement Pass Book (DEPB) scheme, as part of a measure to moderate the price of the commodity in the domestic market.
At a meeting chaired by Finance Minister Pranab Mukherjee on Tuesday, it was also decided that a ‘prohibitive duty' be imposed on the export of raw cotton and cotton yarn. An inter-Ministerial committee of officials would decide on the exact quantum of the levy.
“The panel is expected to come out with its recommendations shortly. It will have its first meeting on Friday itself. It could be in the form of a cess,'' said official sources.
The meeting, which was attended by Agriculture Minister Sharad Pawar, Textiles Minister Dayanidhi Maran and Commerce Minister Anand Sharma, also decided to introduce a mechanism for registration of cotton yarn exporters.
Further, it decided that steps be taken to ensure a carry forward of at least 50 lakh bales of raw cotton at the beginning of the next cotton season.
Mr. Maran had recently written a series of letters to Prime Minister Manmohan Singh and finance, agriculture and commerce ministers urging immediate measures to control the price of cotton yarn, which had been rising steadily in recent months.
Pointing out that the increasing price of cotton yarn was making garment and handloom exports uncompetitive in world markets, he had reportedly emphasised that it would not only make the textile industry unviable, but also had an adverse effect on the employment front. The textile industry is the second largest employer, next to agriculture.
Speaking to The Hindu, Apparel Export Promotion Council Senior Vice-Chairman Praveen Nayyar said the prices of cotton yarn and consequently fabrics had increased by as much as 50 per cent since November. For instance, the price of cotton voile fabric had gone up from Rs.22 to Rs.33 a metre, he said.
Garment exports had already facing severe problems, following the global economic meltdown. As per the latest estimates, the sector was able to achieve exports worth only $7.92 billion during April 2008-January 2009 as against $8.81 billion during the same period in the previous year, a decline of 10.16 per cent.