Coimbatore: With textile imports 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 Post-GST, CVD and SAD were withdrawn and IGST (Integrated GST) was introduced.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).
"In the pre-GST scenario, import of garments from Bangladesh was attracting Rs 77 per piece (where MRP is Rs 999 per piece) and Rs 116/pc (where MRP is Rs 1500/pc) in the shape of CVD plus education cess and thereon," CITI said. "However, in the post-GST scenario, there will be no cost for import of garments from Bangladesh. Similarly, in the case of import of garment from other countries, the cost has been substantially reduced by Rs 77/pc and Rs 116/pc where MRP is Rs 999/pc and Rs 1500/pc respectively," it said.
"Hence, the Indian garment industry will face stiff competition from imported garments, especially from Bangladesh where production cost is already lower than India," CITI stated.
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.
Source: timesofindia.indiatimes.com