Interviews
Silk sector cries out to govt for help
21 Jan '11
3 min read
“The Varanasi textile industry and particularly the silk trade in particular is going through a deep crisis due to an unprecedented increase in the price of raw silk (Not Thrown) and booking price from China for this very important raw material has increased abnormally since August 2010”, said Mr GK Kediya, Chairman & Convener of Yarn Development Committee - Banarasi Vastra Udyog Sangh.
Speaking exclusively to fibre2fashion he informed that, “Domestic prices of raw silk have climbed abnormally from Rs.1,750 per kg to reach a peak of Rs 3,300 per kg, a whopping increase of 88 percent. Despite the fact that, the Finance Ministry had very timely permitted National Handloom Development Co-operation (NHDC) on August 18 to import 250 tons of raw silk duty free, NHDC failed to import for reasons, unknown to us.
“At that time that the Ministry permitted NHDC to import raw silk, booking price was around $40 and now it is $53, after touching a peak of $57. This duty-free import would have helped a great deal & opened new avenues. So we have requested the Union Government to abolish customs duty on imports of raw silk (Not Thrown) and impose 40 percent duty on imports of silk fabrics. The government cannot control the booking price of China, but the least it can give us relief of 30 percent by abolishing custom duty”, he wrapped up by saying.
Mr Kedia is of the opinion that domestic raw silk producers are reaping rich dividends as they keep their prices only slightly below the market price of Chinese raw silk. As a result, without any increase in their cost of production, they have also increased their price by Rs 1500 per Kg and considers this as pure profiteering, depriving weavers of the benefit of cheap domestic raw silk, which could have provided great relief.
He has suggested to the government to increase the raw silk production so that the gap of 10,000 tons between production & consumption can be bridged, without resorting to imports; produce excellent quality of cocoons so that raw silk, equivalent to quality imported from China, can be used without twisting and help in upgrading obsolete reeling machines so that denier of raw silk after reeling is uniform, like Chinese raw silk.
Mr Kedia also raised concerns on the inverted duty structure on import of raw silk & silk fabric. He said, “In our country raw silk & silk fabrics are being imported from China. Unfortunately, duty structure on them is inverted. All over the world, countries impose lower import duty on raw material (raw silk in this case), so that cost of the fabrics manufactured domestically is lower & competitive.
“For the same reason, import duty on finished products (silk fabrics in this case) is kept higher, so that imported finished products prove costlier in comparison to domestic production. But, in case of India, while basic import duty on raw silk is 30 percent, that on silk fabrics is only 10 percent. As a result, due todumping of silk fabrics at abnormally low rates by China, thousands of handlooms and powerlooms both in Varanasi & Bangalore have closed down”, he concluded by saying.
Speaking exclusively to fibre2fashion he informed that, “Domestic prices of raw silk have climbed abnormally from Rs.1,750 per kg to reach a peak of Rs 3,300 per kg, a whopping increase of 88 percent. Despite the fact that, the Finance Ministry had very timely permitted National Handloom Development Co-operation (NHDC) on August 18 to import 250 tons of raw silk duty free, NHDC failed to import for reasons, unknown to us.
“At that time that the Ministry permitted NHDC to import raw silk, booking price was around $40 and now it is $53, after touching a peak of $57. This duty-free import would have helped a great deal & opened new avenues. So we have requested the Union Government to abolish customs duty on imports of raw silk (Not Thrown) and impose 40 percent duty on imports of silk fabrics. The government cannot control the booking price of China, but the least it can give us relief of 30 percent by abolishing custom duty”, he wrapped up by saying.
Mr Kedia is of the opinion that domestic raw silk producers are reaping rich dividends as they keep their prices only slightly below the market price of Chinese raw silk. As a result, without any increase in their cost of production, they have also increased their price by Rs 1500 per Kg and considers this as pure profiteering, depriving weavers of the benefit of cheap domestic raw silk, which could have provided great relief.
He has suggested to the government to increase the raw silk production so that the gap of 10,000 tons between production & consumption can be bridged, without resorting to imports; produce excellent quality of cocoons so that raw silk, equivalent to quality imported from China, can be used without twisting and help in upgrading obsolete reeling machines so that denier of raw silk after reeling is uniform, like Chinese raw silk.
Mr Kedia also raised concerns on the inverted duty structure on import of raw silk & silk fabric. He said, “In our country raw silk & silk fabrics are being imported from China. Unfortunately, duty structure on them is inverted. All over the world, countries impose lower import duty on raw material (raw silk in this case), so that cost of the fabrics manufactured domestically is lower & competitive.
“For the same reason, import duty on finished products (silk fabrics in this case) is kept higher, so that imported finished products prove costlier in comparison to domestic production. But, in case of India, while basic import duty on raw silk is 30 percent, that on silk fabrics is only 10 percent. As a result, due todumping of silk fabrics at abnormally low rates by China, thousands of handlooms and powerlooms both in Varanasi & Bangalore have closed down”, he concluded by saying.
Fibre2fashion News Desk - India
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