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Sharp rise in India's textile imports post-GST
Dec '17
There has been a sharp increase in India’s imports of textiles, particularly yarn and fabric made from man-made fibre (MMF) and cotton fabric, in the first two months after implementation of the Goods and Services Tax (GST), Confederation of Indian Textile Industry (CITI) has said citing data from Directorate General of Commercial Intelligence & Statistics.

The import of MMF yarn increased from $8.92 million in July 2016 to $14.97 million in July 2017, registering 68 per cent growth. In August 2017, imports were valued at $18.49 million, up 58 per cent compared to $11.70 million in corresponding month of last year.

MMF fabric import showed 30 per cent growth in both July and August 2017. Cotton fabric import increased by 45 per cent and 29 per cent respectively in July and August to $12.81 million and $13.35 million.

Also, as per the quick estimates in October month there has been a 12.1 per cent increase in import of yarn, fabric and madeups.

“Pre-GST, import of textile products were attracting Basic Customs Duty (BCD) plus Countervailing Duty (CVD) and Special Additional Duty (SAD). Post-GST, CVD and SAD were withdrawn and IGST was introduced. Unlike CVD and SAD, IGST is fully adjustable against GST liability on sale of the imported product. Recognising the problem and threat of imports flooding the market, the government has recently increased import duty on MMF fabric from 10 per cent to 20 per cent. However, the import duty on MMF yarn and cotton fabric have been kept at the old rates,” CITI chairman Sanjay Kumar Jain said.

He also pointed out that MMF yarn, cotton fabric and MMF fabric are largely affected by cheaper imports from China, Indonesia, Thailand and North Korea where fabric industry is subsidised substantially to increase their shares of fabric in the world textile trade. Moreover, Indian fabric manufacturers have no protection from FTA countries that have been importing fabrics from China, Indonesia and Pakistan and selling garments made from such fabric to India.

He also stated that as per Customs Notification No. 85/2011 dated 06/09/2011, the basic customs duty on import of garments from Bangladesh is exempted. In the Pre-GST scenario, import of garment from Bangladesh was attracting cost of Rs 77/pc (where MRP Rs 999/pc) and Rs 116/pc (where MRP is Rs 1500/pc) in the shape of CVD + education cess thereon. However, Post- GST scenario, there will be no cost for import of garments from Bangladesh. Similarly, in the case of import of garment from other countries, the cost has been substantially reduced by Rs 77/pc and Rs 116/pc where MRP is Rs 999/pc and Rs 1500/pc respectively. Hence, Indian garment industry will face stiff competition from imported garments, especially from Bangladesh where production cost is already less than India.

CITI has requested the commerce and textile ministers to increase import duty on MMF yarn, cotton fabric and MMF fabrics by 15 per cent to give ample protection to the local yarn, fabric and garment producers from the cheap import threats especially from FTA nations like Bangladesh and Sri Lanka.

Jain also stressed that there is a greater need to impose safeguard measures such as Rules of Origin, Yarn Forward and Fabric Forward rules on the countries like Bangladesh and Sri Lanka that have FTAs with India to prevent cheaper fabrics produced from countries like China routed through these countries. (RKS)

Fibre2Fashion News Desk – India

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