Textile Industry Observers Seek Stringent Anti-Dumping Measures To Offset GST Impact

Economy

Textile Industry Observers Seek Stringent Anti-Dumping Measures To Offset GST Impact

With the completion of one month of the new GST tax regime, the textile industry is still grappling with odds to restore normalcy after suffering a dip of 50 per cent sales in the recent past.

More than the immediate dip in sales that the industry partly attributes to seasonal fluctuations, the fear prevailing across the sector is that if the Indian government fails to hike tariffs on import it would result in disaster as the Chinese markets’ cheap fabrics would flood the Indian markets in a span of few months.

Besides, the on-going textile strike in two of India’s main textile hubs, namely Ahmedabad and Surat has resulted in a major standstill in the textile sector. This is again a grave situation as textile sector is the second largest employment generator in India after agriculture.

Industry bigwigs from the south opined, “Ahmedabad is hailed as the biggest market for synthetic fabrics in the country. The marathon strike that has taken shape in this hub is affecting the textile industry very adversely. They however, ended on an optimistic note stating, “Situation seems to be normalizing after all this and it’s a matter of time before the Indian textile industry resumes its forward march in the twenty first century.”

Industry observers felt that the disruption in the textile value chain has led to a slump in business in the recent month. A spokesman of Clothing Manufacturers’ Association (CMA) opined, “As most companies or firms in the sector are unprepared with their IT infrastructure sales figures in the garment and apparel industry plummeted by a steep 15 per cent. We have to upgrade our IT infrastructure to meet the requirements of the new tax regime.”

Industry experts pointed out that prior to the GST regime, import tariffs proved to be prohibitive owing to customs duty and other countervailing taxes that worked out to be 15 per cent. “Thus the Indian market was buffered from cheap imports to a large extent. However, with the arrival of the new tax regime, the onus of taxes will pass on to the end consumer,” they concluded.

The other fear factor that was expressed was that countries like China and Indonesia will route their textile goods through Bangladesh and succeed in dumping their yarn and fabric in the domestic markets.