The cotton yarn industry of north India has said the decision to suspend tax sops on yarn exports would affect their profitability and may not help in moderating the price of the commodity in the domestic market.
Last week, the government had decided to suspend the 7.5 per cent duty concession on cotton yarn exports to discourage outward shipments and help cool down domestic prices in turn.
Under the scheme, these firms get customs duty refund on imported inputs of the export items.
"An increase in cotton prices in the past few months has led to a rise in cotton yarn prices. Also, the labour cost has almost tripled during the past three years and the industry is facing severe power shortages, which is affecting production costs and availability," Northern India Textile Mills Association (NITMA) President Ashish Bagrodia said in a statement.
The prices of raw cotton have increased from Rs 23,000 to Rs 29,000 per candy (356 kg) in the past three months, NITMA said.
It said, the government should withdraw the sops in a caliberated manner so that the industry can remain efficient and competitive.
Also, the government has imposed a duty of Rs 2,500 per tonne on raw cotton exports in order to moderate prices of the commodity in the domestic market and help the local textiles industry.
