Domestic manufacturers would get an edge over imported products
The Government of India has doubled import duty on 328 textile products to 20 per cent from the earlier 10 per cent under Section 159 of the Customs Act, 1962. Fibre2Fashion spoke to a segment of the industry about the likely impact of the government’s decision.
The move is very much in the direction to encourage domestic manufacturing and will give a further relief to domestic textile and carpet manufacturers.
The measures taken by the government in last few months for the textiles sector have been very encouraging and given confidence to the domestic textile industry that has been reeling under the pressure of growing competition and rising cost.
This has also given us hope that the government will address the issue of rising garment imports from Bangladesh, which remains an area of concern for the industry, due to full exemption of basic custom duty from Bangladesh.
The Indian government’s decision to increase the basic customs duty on 328 textile products has come at a right time and would certainly boost the ‘Make in India’ initiative.
CITI had been continuously representing to the various ministries of the government on the issue of rise in imports of yarn, fabric, madeups and garments made out of man-made fibres and filaments with a request to increase basic customs duty on imports of such products as they are being manufactured in the country by a large number of factories in MSME and organised mill sector. The government has understood the gravity of the situation and immediately addressed the issue by doubling the import duty on textile products where imports have increased many-folds, post GST.
The major part of employment creation happens in the downstream industry like knitting, weaving, apparel making and madeups. The new measures along with those announced in July in relation to import duty and GST by the government will certainly motivate the industry to achieve ambitious targets set for the textile and clothing sector.
Several Chinese textile factories are dumping their textile products all over the world at very low prices. This is even lower than the production cost in some countries. This is a major rising concern for the textiles industry. In order to overcome this problem, the Government of India has doubled the import duty on certain items. This will help to keep the prices of Indian textile products on par with the textile products of other countries. It will not only boost the textile factories that are selling in local market, but also create healthy competition. It will also give further impetus to the government’s ‘Make in India’ initiative. It will also lead to more job creation in India in the textile sector.
The government will benefit from higher import tax collection as well as from GST as the domestic textile sector improves. However, in those textile items where the import duty has been hiked, India’s textile imports are much lower compared to the exports, and this is a cause of concern. Hence, the government should consider a broader perspective and take care that this move does not affect the exporters and textile exports.
While there is a need to support the textiles sector to encourage domestic manufacturing, according to trade experts, the Indian government would not be able to give any direct export incentive to the segment.
So, the government had last month doubled import duty on over 50 textile products – including jackets and suits – and carpets to 20 per cent. Now, it has increased duty on another 328 items. This decision would help millions of people get employment in the manufacturing sector of the various segments of the entire textile value chain. It would also help promote ‘Make in India’ as imports of these goods had surged drastically in the last one year, especially post GST.
Lower import duties favoured imported textile products over domestically produced goods. With the increase in duties, now, domestic manufacturers would get an edge over imported products.
The increase in basic customs duty has directly impacted the sales and viability of my business in a positive manner, as we faced the most competition from imported goods.
The doubling of import duty by the Indian government would be much beneficial to the Surat textile industry. This will benefit small traders in the domestic market the most.
However, the government should also impose duty on Bangladeshi goods that currently enjoy duty-free status, to give further boost to Indian trade.
Published on: 08/14/2018
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.