How Slashing The Import Duty On Cotton Is Likely To Affect Spinning Mills

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Introduction

• The Australia-India ECTA will bolster textile
  exports significantly through preferential market
  access
• Another important update is the removal of import
  duty on cotton for a period of five-and-a-half
  months
• Right from spinning mills to cotton suppliers and
  spinning can manufacturers, the news of cotton
  import duties being slashed opens up a plethora
  of benefits
• Let us here take a look at how slashing the
  cotton import duty can affect spinning mills.

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AVAILABILITY OF COTTON AT COMPETITIVE RATES

• To stay competitive, the Indian textile sector
  needs the support of favourable government
  policies
• The news of cotton import duties being slashed
  has come as a welcome one in this regard
• It is widely expected that this policy shift will
  bolster the availability of cotton at highly
  competitive rates
• As a result of the removal of the import duties,
  cotton imports in the domestic markets will
  significantly ease.

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2. DIMENSIONAL ACCURACY OPERATIONAL
EFFICIENCY

• Randomly selected spinning can and accessories
  are not able to maintain the accuracy levels
  required for high-quality yarns
• So, mill-owners should go with high-density
  polyethylene (HDPE) sliver cans
• When spinning cans are not carefully chosen,
  there is a relatively high risk of sliver damages
• The top sliver can manufacturers, like Jumac
  Cans, help their clients eliminate such risks.

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3. A BUFFER AGAINST COTTON PRODUCTION
UNCERTAINTIES

• At present, there is a 5 AIDC cess (Agriculture
  Infrastructure Development cess) on cotton
  imports
• A further 5 import duty is levied as Basic
  Customs Duty (or, BCD)
• In a country like India, where sudden
  unseasonal rainfall often affects cotton
  production
• High import duties serve as roadblocks for both
  domestic international buyers, and for the
  textile sector as a whole.

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4. BOOSTING SPINNING MILL PRODUCTIVITY OUTPUT

• As cotton prices have been increasing in the
  domestic markets, the productivity and cash flows
  of spinning mills are getting adversely affected
• In the last few months, the ICS-105 cotton
  variety witnessed a price rise of around 70
• The falling production levels at mills were
  impacting the demand for spinning machinery and
  HDPE spinning can accessories
• The removal of cotton import duties will
  significantly ease the liquidity problems that
  Indian mills are facing at present.

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5. DOING AWAY WITH COTTON HOARDING HABITS

• The high cotton prices had, over the last few
  quarters, given rise to cotton hoarding
  tendencies among many domestic players
• The frequent rises in cotton prices were
  threatening to stunt the growth of the Indian
  textile yarn industry
• With the duties no longer in place, yarn fabric
  production would benefit from the lower material
  costs
• Malaysia and Dubai are expected to grow, and
  India would once again be able to stand out as a
  force to reckon with in the global textile
  industry.

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6. VITAL STEP TO SAVE FROM CRITICAL SITUATION

• The scrapping of the cotton import duties has
  come as a timely step for preventing a major
  crisis for the industry as a whole
• Indian yarn textile industry not being able to
  meet commitments of advance orders because of
  high cotton price
• The uncertain political climate (for example, the
  conflict between Russia and Ukraine) is also
  causing unique problems
• The slashing of the import duties on cotton will
  help in more effective material price management
  and higher operations.

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7. MANIFOLD BENEFITS FOR THE ENTIRE VALUE CHAIN
OF TEXTILES

• From spinning mill operations and sustaining
  day-to-day workflow efficiency levels
• Fabric/yarn manufacturing
• Demand for spinning can products
• Removal of the high import duty of cotton will
  benefit the Indian textile sector
• The Indian textile sector is recovering well from
  the pandemic-induced slowdowns
• Apart from the textile sector and spinning mills,
  the fast-rising prices of fuel and food are
  causing concern as well
• The import duty cut will help in stabilising the
  sector and helping in the post-pandemic recovery.

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8. Removal Of Cotton Import Duty Truly A
Stitch In Time

• With the prices of locally produced cotton
  zooming past the international figures, the
  Indian textile sector has been hemorrhaging for
  some time now
• The policy change will offer a much sought-after
  breather for the domestic textile and yarn
  production sector
• The removal of cotton import duties may not
  immediately bring down the prices
• Going forward, things like tighter MCX trading
  parameters and compulsory disclosure of stocks
  will help matters further.

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Jumac smart can technology is presented in a
comprehensive and user-friendly way to facilitate
the operations. Utilization of this smart can
technology will be a core competence of the mills
in the near future, adding a competitive edge.

• - From an expert

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Thank You!

• Contact us
• Jumac Manufacturing
• 21, C.R. Avenue,
• Kolkata - 700071,
• India

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