Indian textiles flags RPM criteria for BCD waiver on weaving machines

08 May '23

3 min read

Pic: Shutterstock.com

Insights

Indian textile industry organizations are objecting to the RPM criteria for Basic Custom Duty exemption on weaving machines, calling for an amendment to use Weft Insertion Rate instead.
The South Gujarat Chamber of Commerce and Industry has written a letter highlighting international manufacturers' support for WIR as a more accurate measure.

Indian textile industry organisations have raised objections to the criteria of Revolutions Per Minute (RPM) for exemption from Basic Custom Duty (BCD) on weaving machines. The ministry of finance in India had issued a notification extending the exemption for the next two years, starting from April 1, 2023, to March 31, 2025. However, due to the new condition added in the notification, importers are required to pay duty. The industry is demanding an amendment to the notification, replacing the RPM criteria with Weft Insertion Rate (WIR), which they believe is a more accurate technical criterion.

According to the notification issued on March 29, 2023, shuttleless Rapier looms should have a minimum RPM of 650 to be eligible for BCD exemption. For shuttleless Waterjet looms, the minimum RPM is 800, and for Airjet looms, it is 1,000 RPM or higher.

The South Gujarat Chamber of Commerce and Industry (SGCCI) has written a letter to Darshana Jardosh, the state minister of textiles, to address the issue. The letter mentions that leading international weaving machine manufacturers from Europe and Japan have expressed that the RPM of machines does not define their efficiency, contrary to the notification's criteria. They argue that the correct technical criteria, if needed, should be based on Weft Insertion Rate (WIR).

The SGCCI argues that domestic organisations share similar views. The Ahmedabad Textile Industry's Research Association (ATIRA) stated that machines compatible with Amended Technology Upgradation Fund Scheme (ATUFS), as covered under the textile commissioner's office circular, also use WIR as the definition for weaving machines. Top global producers of weaving machines, such as European manufacturers Picanol and ITEMA, and Japanese company Toyota, have also certified that the efficiency of weaving machines, such as Rapier Looms, Projectile Looms, and Airjet looms, is measured in WIR, which is expressed in Meters per Minute (MPM).

Himanshu Bodawala, the president of SGCCI, sent the letter stating that industry representatives have approached the ministry of finance to request an amendment to the notification regarding the relevant definition for BCD exemption on the import of weaving machines. Ministry officials have communicated that any request for amendment should come from the ministry of textile to the Tax Research Unit (TRU) of the ministry of finance. Therefore, the ministry of textile needs to send its recommendation to the ministry of finance.

Ashish Gujarati, immediate past president of SGCCI told Fibre2Fashoin, “The ministry of textile has convened a meeting on this issue on May 10, 2023. The ministry of finance has added this criterion in the notification with the extension of exemption of BCD for the next two years. Shuttleless Rapier looms weaving machines are made with 220 RPM. No machine is manufactured with 650 RMP in the world. There were no such conditions earlier. All imported and domestic machines have RPM lower than 650 so BCD is applicable.”

According to industry estimates, weaving companies have incurred a financial burden of ₹150 crore due to the BCD they had to pay for importing such machines. Importers will continue to pay BCD until the notification is amended. Some industry sources speculate that the condition was added to restrict the import of weaving machines. However, the textile industry considers imported machines more efficient than domestic ones.

Fibre2Fashion News Desk (KUL)

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