Textile body urge to raise imports duty on MMF yarn, cotton fabric

The Confederation of Indian Textile Industry (CITI) has urged commerce and textile ministries to raise import duty on man-made fibre (MMF) yarn, cotton fabric and MMF fabrics by 15 percent to ring-fence local yarn, fabric and garment producers from the threats of cheaper import, especially from FTA nations such as Bangladesh and Sri Lanka.

According to data shared by CITI, imports of cotton yarn, man-made yarn and fabric have gone up dramatically post GST from July.

India’s MMF yarn import hit $14.97 million in July as opposed to $8.92 million in the same month last year. Cotton fabric import showed the same trend, up at $12.81 million in July against $8.84 million last year. MMF fabric import stood at $8.27 million compared to USD 6.36 million in July 2016. Similar conditions prevailed in August.

The overall import of textile yarn fabric and made-up articles stood at USD 153.9 million in October as against $ 137.31 million in the previous year.

CITI Chairman Sanjay Kumar Jain said that the government recognizing the problem and threat of imports flooding the market has recently increased import duty on MMF Fabric from 10 percent to 20 percent. However, the import duty on MMF yarn and cotton fabric remains at the old rates.

He pointed out that MMF yarn, cotton fabric and MMF fabric are largely affected by cheaper imports from China, Indonesia, Thailand and North Korea where fabric industry is subsidized substantially to increase their share in the world trade.

The current scenario is impacting domestic yarn and fabric producers and garment manufacturers.

According to Jain, there is a greater need to apply safeguard guidelines such as Rules of Origin, Yarn Forward and Fabric Forward Rules on countries such as Bangladesh and Sri Lanka that have FTAs with India to stop routing of cheaper fabrics made in China through these nations.

Post rollout of the Goods and Services Tax (GST), there has been a spike in import of MMF yarn, cotton fabric and MMF fabric in July and August 2017. Prior to GST, import of textile products had been attracting basic Customs duty (BCD) plus countervailing duty (CVD) and special additional duty (SAD). Post-GST, CVD and SAD were withdrawn and IGST was introduced.