India: Tax levy on cotton aims to curb price increases

The Indian government is expected to impose an export tax of Rs 2,500/t on raw cotton exports in order to control the increase in raw cotton prices in the domestic market. The decision made by the Minister of Finance, Mr. Pranab Mukki, last week took this decision and the tax period was six months. Due to the sudden increase in the price of cotton, domestic industries, export industries, textile and clothing industries all require restrictions on cotton exports. The Apparel Export Promotion Council (AEPC) praised the measures taken by the Ministry of Textiles.

The Indian Apparel Export Promotion Association said that the government suspended the 7.5% cotton yarn export tax rebate under the DEPB program, which will allow fabric prices to return to actual levels.

The association also said that in addition, the government also imposes a 3% export tax on waste cotton exports and restricts the export of cotton yarns, requiring mandatory registration at the Mumbai Textile Commissioner's Office.

The Ministry of Textiles also decided that the carry-over stock at the beginning of the new cotton season should be kept at 5 million bales. The new cotton year began in October 2010.