Im­port duty on 328 tex­tile prod­ucts dou­bled

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Tak­ing one more step for the do­mes­tic tex­tile in­dus­try, the Govern­ment has dou­bled im­port duty on 328 tex­tile prod­ucts...

Tak­ing one more step for the do­mes­tic tex­tile in­dus­try, the Govern­ment has dou­bled im­port duty on 328 tex­tile prod­ucts. A no­ti­fi­ca­tion to this ef­fect was tabled by Min­is­ter of State for Fi­nance Pon Rad­hakr­ish­nan in the Lok Sabha. The no­ti­fi­ca­tion seeks ‘to in­crease the cus­toms duty on 328 tar­iff lines of tex­tile prod­ucts from the ex­ist­ing rate of 10 per cent to 20 per cent’.

The Govern­ment ex­pects that higher duty will help the in­dus­try, which em­ploys nearly 10.5 crore peo­ple. The in­dus­try is fac­ing a tough chal­lenge from cheaper im­ports. Now, the prob­lem is that In­dia is bound to pro­vide con­ces­sional tar­iff to the least de­vel­oped coun­tries such as Bangladesh, but there is no such bar on im­ports from China. This means higher duty will help curb cheaper im­ports from coun­tries such as China. Also, since In­dia can­not give any di­rect in­cen­tive to do­mes­tic man­u­fac­tur­ing, hik­ing tar­iffs is the eas­ily avail­able op­tion, which the Govern­ment has ex­er­cised now.

The in­dus­try has still to do the de­tailed anal­y­sis of this de­ci­sion, how­ever, it is hope­ful that re­vi­sion in im­port duty has cov­ered MMF Spun Yarn and MMF based fab­rics as huge surge of im­ports have been wit­nessed in these cat­e­gories post GST which is im­pact­ing yarn and fab­ric man­u­fac­tur­ers in a big way. San­jay K Jain, Chair­man, CITI has wel­comed this de­ci­sion and thanked the Govern­ment for the same.

The de­ci­sion does not pos­i­tively im­pact the is­sue of im­ports from Bangladesh where there is a full ex­emp­tion of Ba­sic Cus­toms Duty (BCD) and hence Chi­nese fab­ric is eas­ily com­ing to In­dia duty-free through Bangladesh in the form of Gar­ments. Un­til and un­less Govern­ment in­ter­venes and puts a Rule of Ori­gin clause, im­ports from Bangladesh will keep com­ing at the same pace and would af­fect the fab­ric as well as other seg­ments of the value chain. In the last one year, the im­ports of ap­parel from Bangladesh have in­creased 44 per cent from US $ 140 mil­lion in 2016-17 to US $ 201 mil­lion in 2017-18.

Im­ports of tex­tile yarn, fab­ric and made-up ar­ti­cles grew by 8.58 per cent to US $ 168.64 mil­lion in June. How­ever, ex­ports of cot­ton yarn/ fab­ric/ made-ups and hand­loom prod­ucts grew by 24 per cent to US $ 986.2 mil­lion. Ex­ports of man-made yarn/ fab­ric/ made­ups grew 8.45 per cent to US $ 403.4 mil­lion. Ex­ports of all tex­tile ready­made gar­ments dipped by 12.3 per cent to US $ 13.5 bil­lion.

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