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AD duty on Chinese flax yarn may harm domestic industry
Apr '18
Courtesy: Vrijesh Natural Fibre & Fabrics (India) Ltd
Courtesy: Vrijesh Natural Fibre & Fabrics (India) Ltd
There is a huge demand for linen fabrics in the Indian market, and the proposed imposition of anti-dumping duty on ‘flax yarn’ originating in or imported from China would harm small players in the domestic linen fabric industry. Most of the flax fibre is sent to China after scutching to be spun into yarn, which is then woven into linen fabric.

Linen is a very premium product, as flax is the third most expensive fibre after silk and cashmere. “Yet, there has been a three-fold increase in the consumption of linen in India in the last five years and is only going to continue growing, largely due to the efforts of brands like Linen Club, Linen Fiesta and Raymond that played a large role in bringing the fibre to India and developing the market for it,” said a member of the newly formed India Flax Weavers Association.

The Directorate General of Anti-Dumping & Allied Duties (DGAD), ministry of commerce and industry, Government of India initiated an anti-dumping investigation in February this year concerning imports of ‘flax yarn’ of below 70 Lea count originating in or exported from China. The period of investigation (POI) is from October 1, 2016 to September 30, 2017. However, for the purpose of analysing injury caused to the domestic industry, the data of previous three years, i.e. Apr’14-Mar’15, Apr’15-Mar’16, Apr’16-Mar’17 and the period of investigation will be considered, DGAD said.

“The consumption of linen in India has already crossed 20,000 metric tonnes per annum (mtpa) and is projected to cross 25,000 mtpa in the next two years. The current capacity for domestic linen spinning is less than 10,000 mtpa. Hence, Indian weavers will still need to source yarn from China in the short-term at much higher rates,” according to the association which has started initially with just five members.

So, if there is a shortage of linen yarn (due to anti-dumping duty) in the short-term, foreign companies looking to source linen fabrics and garments will look outside India for alternatives and might even have to help develop this industry in other countries. Once developed, it’ll be hard for Indian weavers and garmenters to bring them back, the association argues.

In theory, exporters could buy the yarn against an Advance Licence for exports and get it duty free, but in practice, it isn’t viable for small exporters to get the licence owing to all the paperwork and formalities involved in it. Atul Agarwal, director of Vrijesh Natural Fibre & Fabrics, said, “The monopolistic market argument plays a role here too. Even in the long-term, if there are just a few big players controlling the supply chain, they’ll take a piece of the pie from smaller exporters, which will largely affect the entrepreneurial spirit and employment in the textile industry. This will also affect the ‘Make in India’ efforts that have been made in the industry.”

Many weavers in weaving clusters across India, including Surat, Bhiwandi, Erode, Bhagalpur, Champa and Varanasi are making sarees, shirting and furnishing fabrics out of linen now. "An increase in price of the yarn and the monopolising of weaving will largely affect the handloom and powerloom weavers across India that are now exclusively weaving linen. This will eventually play a role in killing the dyeing art and tradition of handloom and powerloom weaving that has been passed through generations in India," added Agarwal.

While requesting the government to not to impose anti-dumping duty on flax yarn from China, the association said doing so would create a damaging shortage in the industry, promote a monopolistic market in an infant industry, make India uncompetitive in the export market, and help kill an art and tradition that has been in India for decades. (RKS)

Fibre2Fashion News Desk – India

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