Indian Textile Ministry to Lobby for Equal Tax Treatment of Cotton and MMF

By Jim.Robinson|July 29, 2010

If India’s Textile Minister has his way, the disparity in the way cotton and man-made fibers (MMF) are taxed will soon be a thing of the past. There is currently an 8 percent excise duty levied on MMF textiles, as opposed to an optional duty of 4 percent for cotton.

In global fiber consumption, MMF has a 60-40 edge over cotton; in India’s $63 billion textile industry, however, cotton remains king, with 51 percent of the market compared to MMF’s 41 percent. The increasing shift toward MMF usage is one of the Textile Secretary Rita Menon’s primary reasons for drafting a national fiber policy and presenting it to the country’s Cabinet. Once the draft is completed and submitted, it will be circulated to the Ministries of Agriculture, Commerce and Chemicals.

According to the Business Standard, the draft contends that, “Given that the future demand is expected to be largely in favour of man-made, fibre-based textiles, special attention is required to boost the consumption and production of man-made fibres in India.”

Initial reaction to the draft is mixed, with some sources saying that many of its recommendations—including the creation of an export duty on cotton yarn—would do little to better the textile industry as a whole.

Leave a ReplyCancel reply

Anonymous says:

September 26, 2011 at 3:26 pm

In my opinion shifting from cotton to MMF is not wiseable for the long term future planning. we should emphysis to encrouge cotton use; however impose duty on cotton yarn’s export may promot its export and provide support for its in finished good but softing/obolishing the export’s duty of finshed goods of cotton.

Even with the present taxation system, cotton is
dearer than MMF. Looking at taxation of these two
fibres is a narrow view. Ultimate consumer, common
man can less afford cotton clothing vis a vis MMF
clthing. Reduction in duty of MMF or increase in duty on cotton,both are detrimental to cotton consumption and ultimately to agriculture sector
since cotton is an agricultural commodiy and will ultimately boost MMF consumption.

MMF, other than Viscose fibre, are petoleum products. The Govt should initiate reduction of duties and taxation on Basic product viz petrol/diesel and bring it on par with prices of other countries selling them at much lower prices than us. This will help reduce cost of production of cotton as such price cut will not only reduce field expenses but also ensure availability of other items like seeds, fertilisers,chemicals at lesser prices.

With the ever increasing demand of clothing due to population growth, MMF industries need not fear for competition from cotton as synthetic clothing will always remain a better choice for poor and rural population who need more durable clothing than a comfortable clothing of cotton.
But it is a sorry state of affairs for an agricuturer producing cotton who can less afford clothing of his own produce.

December 22, 2011 at 1:38 am