Sharp Rise In MMF Yarn, Cotton Fabric Imports After GST Roll Out: Trade Body CITI

Trade & Policy

Sharp Rise In MMF Yarn, Cotton Fabric Imports After GST Roll Out: Trade Body CITI

There has been a dramatically sharp increase in inward shipments of imported cotton yarn, man-made yarn and fabrics after GST was rolled out in July 2017, textile industry body Confederation of Indian Textile Industry (CITI) has stated.

In its latest statement, the CITI has informed that it has requested the commerce ministry and the textile ministry to raise import duty on man-made fibre (MMF) yarn, cotton fabric and MMF fabrics by 15% to ring-fence local Indian yarn, fabric and garment producers from the threat of cheaper imports, especially from FTA nations such as Bangladesh and Sri Lanka.

According to data shared by CITI, the import rose during July, August and October, but September figures were not available.

India's MMF yarn import hit US$ 14.97 million in July as opposed to US$ 8.92 million in the same month last year.

Cotton fabric import showed the same trend, up at US$ 12.81 million in July against US$ 8.84 million last year. MMF fabric import stood at US$ 8.27 million compared to US$ 6.36 million in July 2016. Similar conditions prevailed in August.

The overall import of textile yarn fabric and made-up articles stood at US$ 153.9 million in October as against US$ 137.31 million in the previous year.

“Recognising the problem and threat of imports flooding the Indian market, the government recently increased import duty on MMF Fabric from 10% to 20%. However, import duty on MMF yarn and cotton fabrics are still kept at the old rates,” CITI Chairman Sanjay Kumar Jain said.

Jain said that the current scenario impacts domestic Indian yarn and fabric producers and garment manufacturers.

He felt that there is a greater need to apply safeguard guidelines such as Rules of Origin, Yarn Forward and Fabric Forward Rules on countries such as Bangladesh and Sri Lanka that have FTAs with India to stop routing of cheaper fabrics made in China through these nations.

After rollout of the Goods and Services Tax (GST), there has been a spike in import of MMF yarn, cotton fabric and MMF fabric in July and August 2017, Jain stated. Prior to GST, import of textile products had been attracting basic Customs duty (BCD) plus countervailing duty (CVD) and special additional duty (SAD). Post-GST, CVD and SAD were withdrawn and IGST was introduced.

He pointed out that MMF yarn, cotton fabric and MMF fabric are largely affected by cheaper imports from China, Indonesia, Thailand and North Korea where fabric industry is subsidised substantially to increase their share in the world trade.