The Union Government has relaxed the cabotage rules that will help textile mills in south India move cotton from Gujarat by ship, including foreign flag vessels, to the southern States.
Chairman of Southern India Mills’ Association P. Nataraj has said in a press release here that foreign flag vessels will be able to offer competitive rates for moving cotton from Gujarat to Tamil Nadu as a number of empty containers of these vessels can be used between the two States.
During the peak cotton season, the lorry freight cost for a bale of cotton between Gujarat ginning unit to a textile mill in Tamil Nadu is ₹1000.
The transport cost for cotton from West Africa to Tamil Nadu is ₹400 a bale. So, the industry opted for moving cotton by rail and ship. But, this cost was just about 10 % lesser than road movement. Hence, the industry demanded relaxation of cabotage rules.
A couple of years ago the Union Government provided certain exemptions for Indian flag vessels that transported cotton from one Indian port to another. But, it did not exempt the fuel from Sales Tax and the Seafarer Tax and the costs remained high.
Just one or two players offered the service and their costs were not competitive for all the mills. Only large-scale mills were able to use the facility. Now, with the relaxation of cabotage rules for all vessels, the foreign flag vessels will extend the service and this will benefit the farmers in Gujarat and the mills in the south.
