10% Duty on cotton EXPORTS proposed to be levied

Discussion in 'Economy & Infrastructure' started by parijataka, Sep 16, 2013.

  1. parijataka

    parijataka Senior Member Senior Member

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    Is this a move to hurt cotton farmers in Gujarat, Punjab and Maharashtra and hence political opponents in an election year by central govt ? Moreover this year due to good rains a bumper harvest is expected. In the light of the high CAD foregoing foreign exchange earnings does not make sense.

    If so seems like cutting off the nose to spite the face by Congress. Is it a case of Congi machinations yet again, this time at the expesme of cotton farmers ?

    Bad idea

     
    Last edited: Sep 16, 2013
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  3. Abhijeet Dey

    Abhijeet Dey Regular Member

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    The Government should levy duties from imports on non-essential items. More taxes on exports will only hamper India's export potential in other countries.

    Now talking of India's Current Account deficit the government should improve the manufacturing sector of India so that we don't have to import cheap electronic goods from China & other countries which are in huge demand in India. In this case the present government has failed miserably.

    Take for example DRDO made Arjun Mk-2 tanks. It seems Indian Army is happy with more purchase order of Russian made T-90 tanks. So Government should export Arjun Tanks to other friendly countries. Then India will earn foreign exchange money in the long run.
     
  4. no smoking

    no smoking Senior Member Senior Member

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    Less taxes on exports will also hamper India's textile industry which will have to pay a higher price for the cotton due to the pressure of foreign manufacturers.

    Well, in this case, every indian government has failed miserably! Creating a manufacturing sector as Japan, south Korea or even China, is quite expensive. Without huge capital injection, there is no way you can complete that job. Japan found its money from war and colonies before ww2. Koreans got americans financial support. Chinese did it with compulsory transfer from agriculture to manufacturing for 50 years. Thanks to democracy, developing manufacturing is even harder if not impossible.

    With a $8m price, not even interested by your own army, I really don't see there is any potential export market for this kind of tank. Actually, this tank reflects a problem of inidan industry: having no idea who they are selling to
     
  5. pmaitra

    pmaitra Moderator Moderator

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    Good idea.

    We've had a thread on this long time back. All these export oriented businesses, be it textile, or IT/Software, lobby the government to keep inflating the currency, so as to remain competitive in the export market. This action benefits only these exporters, but hurts the overall economy badly.

    Lesson for exporters, keep the interests of the nation ahead of your personal profits, or else, face punitive measures.
     
  6. no smoking

    no smoking Senior Member Senior Member

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    Well, in this case, it is actually a competition between 2 exporters: cotton farmers and textile producer. Imposing a duty is transfering profit from one sector to another. You can hardly declare which one represents national interest.
     
  7. pmaitra

    pmaitra Moderator Moderator

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    I never claimed that either represents national interest. Also, I am not aware of cotton farmers exporting cotton. It is usually done by those that buy cotton from the farmers, and sell them abroad. (What exactly happened in this case of cotton, I would like to know.)

    I know for sure that textile exporters were lobbying to government to keep the Rupee sliding, so that they can go about their business. It improves export figures, and the profit certainly benefits the exporters more than the nation as a whole. However, when we have to import expensive items from abroad, the cost is equally divided across the entire nation. That is when a weak Rupee really hurts.

    I have no problem if devaluation of the Rupee helps in the exports, but to enable that, since the government was lobbied to devalue the Rupee, it is fair the government to impose a cess or levy on the export profits, so as to buttress the reserves.
     

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