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

The Economic Times - - Companies: Pursuit Of Profit - Jayashree.Bhos­ale @times­group.com

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.

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