Mr. Sanjay K. Jain, Chairman, Confederation of Indian Textile Industry (CITI), has stated that fibre consumption at the global level is dominated by man-made fibres having 70% share, while natural fibres constitute only 30%. Contrary to the global trend, fibre consumption in India is skewed towards natural fibres, especially cotton. Growth of cotton is limited owing to the limited agricultural land availability and price volatility. Hence, in order to achieve the desired growth target of $300 billion market by 2025, it has become important for India to focus on man-made textiles along with cotton textiles.
Mr. Rakesh Mehra, Convenor, CITI’s Sub-Committee on Man-Made Fibre & Yarn, has pointed out that the downstream industries in the MMF textile value chain – spinning and weaving, the largest employment generator in the entire value chain – are facing acute stress due to high prices of domestic staple fibre relative to what competitors get in other countries. This affects the export competitiveness of the domestic downstream MMF textile industry and also makes the industry vulnerable to imports of value-added MMF products.
Mr. Mehra has also stated that anti-dumping duties in the beginning of the textile manufacturing chain hurt the down-stream industry. Presently, anti-dumping duty on PTA is Rs. 4-6 per kg and on VSF is Rs. 12 per kg. India has huge capacities in the manufacturing of polyester staple fibre and also viscose staple fibre. Moreover, it may be noted that import of man-made staple fibre in 2017-18 stood at 149 million kg which is less than 15% of the total consumption in India. Hence, he has suggested that the Government may abstain from enhancing custom duties and levying anti-dumping duties on staple fibres. This will allow the downstream industries along the value chain to grow.
Mr. Sanjay Jain has expressed his concern over rising imports of man-made textiles post implementation of GST. As indicated in the table below, in the post-GST regime import of yarn, fabrics and garments has increased substantially.
Mr. Jain has pointed out that the inverted duty structure in the case of MMF textiles has lead to GST paid on capital goods, services & certain inputs being added to the cost in the hands of the MMF textile buyer. These taxes are not considered for calculation of refund of input tax credits. This has made MMF textiles costlier to the extent of such un-refunded taxes. This will restrict further expansion in the MMF textile value chain.
The refund of input credits due to Inverted Duty is a tedious task and the smaller players are unable to avail it and even those are getting refund are facing liquidity stress. These issues are also responsible for import of MMF yarn and fabric becoming viable and preferred.
Mr. Sanjay Jain further said that analysis of China’s export of MMF textiles and clothing indicate that share of value-added products – fabric, apparel and home textiles is 85% as against ours 65%. Fibre and yarn constitute 7% of their total exports whereas the corresponding number in our case is 22%. Thus, it is only logical to conclude that India must concentrate on increasing exports of value-added products along the value chain. Countries like Bangladesh, Cambodia and Vietnam have made substantial gains in their exports of apparel without really augmenting capacities in manufacturing fibre and yarn. The value addition will increase our export numbers and also create jobs which is required to make the Prime Minister’s ‘Make in India’ programme successful.
Mr. Jain also suggested that the Government must enter into Free Trade Agreements with major markets like the EU, the US, Canada and Britain for the export of MMF garments and fabrics out of India. Such benefits are available to Bangladesh, Vietnam and others. Growth seen in these countries is a result of such bilateral agreements. These countries do not even have fibre manufacturing and have concentrated on the downstream industries alone.
Further, for the upliftment of the MMF sector, the CITI Chairman requested the Government to reduce GST on MMF from 18% to 12% and GST on MMF raw material, viz., PTA and MEG from 18% to 12%. Also, anti-dumping duty on PTA in the recently initiated sunset review may be discontinued. He also requested the Government to increase the import duty on MMF based spun yarn and fabrics as huge surge of imports have been seen in this category post-GST which is impacting spun yarn and fabric manufacturers in a big way.