Textile Cos Fear Losing Out to Chinese
Industry, which is slowly getting back to normalcy, fears an increase in imports under GST, wants higher duties
Pune: The textile industry, which suffered a sales decline of up to 50%, is slowly getting back to normalcy as the new tax regime completes one month of implementation on Tuesday.
Industry players, however, warned that if the government does not raise duties to restrict imports, the trade would be massively hit by cheap fabric imports from China in next few months.
Strike in Surat and Ahmedabad, key centres of textile industry in the country, had crippled the industry, which is second largest employment generator after agriculture.
“Ahmedabad is the biggest market of synthetic fabric in the country and the long strike there had severely impacted the industry,” said J Thulsaidharn, chairman of Sout-
hern India Mills Association. “However, the situation is normalising at a fast pace now.”
The disturbed industry value chain led to a fall in business. “The consumer product sales were down by 50% in July,” said Vijay Puniyani, senior vice present at Vardhaman Textiles.
Suresh Mehta, president of
The Road Ahead
Clothing Manufacturers Association of India, said clothing sales were down by 10-15% in July as the companies are not yet ready and their IT systems not geared up for the change in the tax regime. However, the dip in July sales of clothing over previous year is also linked to sales season starting in June instead of July, industry sources said.
Though the industry is hopeful of adjusting to the new tax regime, it is more concerned about the bigger threat of imports becoming cheaper under GST (Goods and Services Tax) regime.
“There is threat of substantial increase in import of fabric from China as imports have become cheaper by 6% to 8%,” said Mehta. Puniyani of Vardhaman Textiles pointed out that before GST, the domestic industry was protected from imports with customs duty and countervailing duty and some other taxes that totalled to about 15%. “However, now all these taxes will be passed on to the consumer,” he said.
Thulsaidharn of Southern India Mills Association said, “With 18% GST on synthetic yarn, there is very narrow difference in the domestic yarn and synthetic yarn.” Spinning and weaving industry also fears that yarn and fabric from countries such as Indonesia and China, will be dumped in the country after being routed through Bangladesh.