Mr. Sanjay K. Jain, Chairman of the Confederation of Indian Textile Industry (CITI), has appreciated the upward revision of customs duty on import of textiles goods from other countries.
Earlier, CITI had made a number of representations to the Finance Minister, the Textile Minister and the Commerce & Industry Minister for raising the Basic Customs Duty (BCD) to safeguard the Indian fabric producers against increasing imports, particularly in the post-GST regime as CVD and SAD applicable on imports had been abolished making imports cheaper by about 15%.
Mr. Jain has thanked the Ministers for increasing the basic customs duty to protect fabric producers of the country. The positive and welcome step by the Government will go a long way in promoting the Prime Minister’s Make in India, Skill India and India as a Global Textile Hub initiatives.
The announcement has given the textile fabric industry a big relief as it was going through tremendous pressure in the post-GST regime. It will also help the textile industry to strengthen itself in the domestic as well as international markets.
Mr. Jain is also happy that the announcement will help increase fresh FDIs, especially in the fabric sector, which will help the textile industry enhance its capacities to meet future challenges and opportunities arising in the domestic and foreign markets and explore new markets. The duty increase is mainly for man-made fibre based fabric, which is a weak link in the country and needs a lot of investment to increase the Indian textile industry share in the MMF category.
However, Mr. Jain said import problems are not fully over. There is the bigger issue of imports from the FTA countries like Bangladesh and Sri Lanka where there is full exemption of basic custom duty. This is indeed a gateway for Chinese fabrics entering India duty free in the form of garments. This is because no Rule of Origin norms restrict duty-free imports from these SAARC countries.
Further, FTAs with certain other Asian countries allow certain imports duty free, impacting the domestic industry. Again, duty increase in BCD still doesn’t bring the overall import duty rates to the pre-GST level. Hence the industry is still relatively at a disadvantage post-GST by about 5-7%.
Mr. Jain has expressed confidence that the problem of non-refund of GST on inputs for fabric manufacturers is resolved at the earliest, so that the disadvantage against imports is also taken care of. In fact, fabric imports carry 5% IGST while, due to the inverted duty structure, domestic manufacturers’ effective IGST is in the range of 7-9%.