USDA: India’s Cotton Import Duty Rescinded Until Late September 2022

Posted on by vbodmer

Report Highlights:

On April 13, 2022, the Government of India rescinded its cotton import duty of 10 percent until September 30, 2022. This import duty consists of a five percent basic customs duty and a five percent Agriculture Infrastructure and Development Cess (AIDC), which has been reversed to “Nil” until the end of the Indian cotton marketing year (October/September). This reduction is expected to support the textile sector as they deal with record high domestic fibre prices. Indian ex-gin prices are currently 4-5 percent higher than the Cotlook-A Index, demonstrating that Indian supplies are more expensive than those of global competitors.

General Overview

On April 13, 2022, the Government of India (GOI) published a notification that rescinded the import duty of 10 percent on cotton (HTS code 5201 – cotton, not carded or combed). The revocation will be effective on April 14, 2022 until September 30, 2022.

The Indian textile sector has faced major issues in sourcing fiber supplies as domestic prices have risen significantly and are currently 4-5 percent higher than the Cotlook A-Index.  This relief will support mills’ efforts to achieve their export targets during the remainder of the season. However, trade sources indicate that the duty exemption should be extended to at least the end of December as a large volume of new crop arrivals will be available across the country during that period. The United States, Egypt, and Israel remain major suppliers of Extra Long Staple (ELS) cotton to India. Australia and Brazil are the major suppliers of long staple cotton to India.

Background

On February 2, 2021, the GOI imposed a ten percent duty on imported cotton. The duty consists of a five percent basic customs duty and a five percent Agriculture Infrastructure and Development Cess (AIDC). The GOI also imposed a ten percent duty on imported cotton waste. Since then, the Indian textile sector had expressed concerns over these duties as they have led to higher costs for textile exporters and the textile value-chain who use imported cotton for yarn, apparels, and home textile products.

Disclaimer: This summary is based on a cursory review of the subject announcement and therefore should not be viewed under any circumstance, as a definitive reading of the regulation in question, or of its implications for U.S. agricultural export trade interests.

Details of Notification: Notification No. 22/2022- Customs – Seeks to prescribe BCD and AIDC on Raw Cotton for a specified period.

Type of Regulation: Notification

Public Notice Date: April 13, 2022

Proposed Date of Adoption: Effective on April 14, 2022 until September 30, 2022

Products Affected: Raw Cotton and Cotton Waste

Agency in Charge: Ministry of Textiles, Government of India

Additional Notifications –

www.usda.gov