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India Government May Cut Cotton Import Tax

2008/4/11 14:15:00 21

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India'S Government May Cut Cotton Import Tax.

The government of India may reduce the import tax on cotton, which is one of the policies to solve the cost of fiber in local clothing factories.

The policy will allow additional import of cotton from Africa at zero tariff and competition with cotton in India.

The government of India is preparing to cut the import tax of cotton from 10% to 5% and cancel 4.5% of the additional duty.

The India government may also cancel export incentives, such as 1% of the tax rebates for packaging materials.

The government of India will allow cotton imports from Africa's underdeveloped countries to import zero tariffs.

The list of underdeveloped countries will be extended to other regions.

The India government's move will increase direct competition, when cotton farmers in India celebrate high cotton production.

In 2008, special international demand brought unprecedented cotton growers, for example, despite the record of cotton production.

India has now become the destination for providing high quality cotton, and the cotton export in this cotton season reaches 10 million bales.

But the unprecedented rise in cotton prices has made textile factories angry, and they are under pressure from low profits and India rupees appreciation.

Textile factories believe that tariff cuts will put psychological pressure on the cotton market and prevent speculative hoarding, especially exporters' hoarding.

We believe that foreign trade companies can control 2 million 500 thousand bales of cotton, officials of the East India Cotton Association said.

This has undermined the market.

Besides, if the price is reasonable, the textile factory can import cotton.

Africa's cotton is 4 cents higher than India's cotton.

In addition, India has a 8 cent tariff.

If the tariff is zero, Africa's cotton will be more expensive than India's cotton, a trade organization in Mumbai said.

But India itself is one of the cheapest and largest cotton producers in the world, and India finds it more difficult to choose the source.

Moreover, there is no sign that cotton in India will soon run out.

India produced at least 31 million bales of cotton.

The factories in India consumed 21 million 500 thousand bales of cotton and 2 million 500 thousand cotton in the last cotton season.

That leaves India with almost 10 million packs of cotton left.

Because India's cotton exports can not exceed 6 million 500 thousand packages, there is almost no reason for panic.

The government of India will reverse the price signal by cutting import duties.

If India's cotton production continues to grow, India will become the largest cotton producer in the world in two years.

The larger cotton mills and exporters said India's textile factories were in distress because they could not suppress cotton prices as they hoped.

The US Department of agriculture's 2007-08 cotton forecast has reduced cotton production, consumption and cotton trade in the world market.

Cotton production in China, Brazil and Turkey will decline, but cotton production in Pakistan will rise.

The world's cotton consumption may decline, mainly due to the decline in cotton consumption in China, India and Turkey. This is due to the weak demand for textiles and the relatively high price of cotton compared with polyester prices.

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