COIMBATORE: With textile imports seeing a sharp increase in the past few months, the industry is blaming GST for the 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% year-on-year in October to $153.9 million, according to estimates.
Pre-GST, import of textile products attracted basic customs duty (BCD) plus countervailing duty (CVD) and special additional duty (SAD). Post-GST, CVD and SAD have been withdrawn and IGST (Integrated GST) was introduced. “Unlike CVD and SAD, IGST is fully adjustable against GST liability on sale of the imported product. Recognising the problem and threat of imports flooding the market, the government recently increased import duty on MMF(man-made 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 a piece (where MRP is Rs 999 a piece) and Rs 116 a piece (where MRP is Rs 1,500 a piece 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 a piece and Rs 116 a piece where MRP is Rs 999 a piece and Rs 1,500 a piece 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 said. The textile body has urged the government 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 needto impose safeguard measures such as ‘Rules of Origin’, ‘Yarn Forward and Fabrics produced from countries like China routed through these countries,” Jain said.