Coimbatore: With textileimports seeing a sharp increase in the past few months, the industry is blaming GST for the sudden rise stating that lower import duties are leading to overseas fabric and garments flooding the Indian market.
Cotton fabric imports surged 45% in July, was up 29% and 12% for August and September respectively. Import of textile yarn, fabric and made-ups increased 12.1% year-on-year in October to $153.9 million in October, according to quick estimates for the month.
Pre-GST, import of textile products was attracting basic customs duty (BCD) plus countervailing duty (CVD) and special additional duty (SAD). Post-GST, CVD and SAD were withdrawn and IGST (Integrated GST) was introduced.
“Unlike CVD and SAD, IGST is fully adjustable against GST liability on sale of the imported product. The government recognising the problem and threat of imports flooding the market has recently increased import duty on MMF (manmade fibre) fabric from 10% to 20%. However, the import duty on MMF yarn and cotton fabric have been kept at old rates,” said Sanjay Kumar Jain, chairman, Confederation of Indian Textile Industry (CITI).
CITI has urged the Union commerce and textile ministries to increase import duty on MMF yarn, cotton fabric and MMF fabric by 15% to protect the local yarn, fabric and garment producers from cheap import threat, especially from FTA (free trade agreement) nations like Bangladesh and Sri Lanka.
“There is a greater need to impose safeguard measures such as ‘Rules of Origin’, ‘Yarn Forward and Fabric Forward Rules’ on countries like Bangladesh and Sri Lanka that have FTAs with India to prevent cheaper fabrics produced from countries like China routed through these countries,” Jain said.