Sanjay Jain, Chairman, CITI welcomeed the decision to increase import duty on 76 textile and apparel items at 6 digit level to protect the domestic manufacturers from rising imports. The import duty which was earlier 10 per cent will now be 20 per cent for these items. There has been increase in import duty of 24 knitted apparel categories, 24 woven apparel categories, 10 categories of carpet, 6 nonwovens categories, 3 categories of laminated fabric, 2 knitted fabric, 2 categories of woven fabric, 2 categories of made-ups and 3 other categories.
He thanked the Hon’ble Minister of Finance for addressing the issue of rising imports of textile and apparel goods. He highlighted that it is a very positive move by the Government and has given a major relief to the garment and carpet manufacturers as they were going under immense pressure post GST. A substantial drop in import duty was observed after implementation of GST, which has encouraged cheaper imports. This has come as a great relief to the domestic manufacturers.
Jain pointed out that in the year 2017-18, India imported approx. $7 bn worth textile and apparel products. The imports have grown from $6 bn in 2016-17 at a rate of 16 per cent. Government has increased import duty for commodities which accounted for approx. 26 per cent ($1.8 bn.) of total imports by India. He further stated that imports of readymade garments increased from $596 mn in 2016-17 to $773 mn in 2017-18. 48 apparel commodities for which the import duty has increased accounts for approx. 82 per cent ($630 mn) of the total apparel imports. This will definitely prevent apparel imports from China, which is the largest supplier of apparel to India.
However, he further stated that the problem of industry is not yet over. There is a big issue of imports from Bangladesh where there is full exemption of Basic Customs Duty and hence it is a gateway for Chinese fabric entering India duty free. This is because no rules of origin are in place for duty free imports from Bangladesh. In 2017-18, the imports of apparel from Bangladesh stood at $201 mn which has increased from $140 mn in 2016-17 at a rate of 44 per cent. Hence it is suggested that the government may consider imposition of safeguard measures such as Rules of Origin on the countries that have FTAs with India to prevent cheaper fabrics produced from countries like China routed through these countries. Further, there is need to increase import duty on MMF Spun Yarn, MMF based Fabrics as huge surge of imports have been seen in this category post GST which is impacting yarn and fabric manufacturers in a big way. In October 2017, the Government had increased duty on fabrics from 10 to 20 per cent, however many HS Codes were left out through which imports still continue. Sanjay K Jain was hopeful that the government will immediately address the unresolved issues of the textile sector to make the sector globally competitive. He stated that CITI had highlighted the issue of rising imports to different Ministries and requested the Government to take immediate steps to support the textile sector.