The textile ministry in consultation with the finance and revenue departments to look at the possibility of a duty cut on man-made fibre as high cost of key raw material for manufacturing blended garments is making Indian goods uncompetitive in the global market. Each year, nearly Rs . 900 crore worth of man-made fibre material is imported by garment makers.
The textile industry has been intensely lobbying for duty cuts on both domestic and import fronts, had been given hope during the previous year's budget, but the decision is yet to arrive.
SK Panda, secretary, ministry of textiles said that they are pursuing the matter with the ministry of finance. Since the proposal is for a rate cut, which is an issue of revenue loss for the government, it is taking time.
According to World Trade Organisation data, among southeast Asian nations, India has 5-10 percent customs duty on many of the fibres, but its competition countries such as Thailand, Indonesia and Vietnam have lower duty structures ranging from zero to 5 percent.
While, man-made fibre draws an excise duty of 12.5 percent, it has elaborate import restrictions, leading to a cumulative duty of 29 percent. Viscose fibre, one of the most common man-made fibres, attracts an anti-dumping duty, which takes its total duty up to 46.3 percent.
The cost of one kilo of viscose fibre is around Rs . 155, while the same material costing Rs. 111 in China, expressed in Rs will cost Indian currency. Taking into account the import duty on the fibre, foreign shipments cost as much as the Indian produce.
Tonnes of the material are being imported by Indian garment makers as the global market for blended garments is surging and there are not enough Indian suppliers. India exported Rs . 2,480 crore worth of man made fibre goods in April this year, a drop of 6 percent compared with the same period last year.
Indian clientele for garments includes global retailers such as Walmart, British clothing company Next, German and fashion retailers, Oliver.
Textile entrepreneur Milton John, whose Cotton Blossom India exports finished garments worth Rs. 200 crore annually, lost key client Walmart to a Cambodian competitor last month purely because of over high costs of sourcing associated with India-made blended garments.
According to Prabhu Damodharan, secretary, Indian Texpreneurs Federation, due to high input costs, Indian exporters are losing business as a lot of orders have started shifting to southeast Asian nations now.
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