With a fortnight left for the Centre to decide on extending anti-dumping duty on raw silk, a number of controversies have cropped up over the issue.

The Centre imposed anti-dumping duty on Chinese raw silk in 2003 and on fabric in 2006 to safeguard interest of sericulture farmers and weavers. However, the duty, instead of reducing exports, lead China to take price taking advantage of the regular shortage for raw silk in India, said Narendra Kapoor, ex-president of Eastern Uttar Pradesh Silk Exporters Association.

The anti-dumping duty on raw silk, which is due for renewal in January 2009, was imposed on the basis of landing price of $27.98 per kg of the raw silk or yarn. The duty is the difference between the base and landed price of raw silk.

After implementation, the raw silk price in India climbed over $32 per kg last year from $12-13 in 2003, said Vaibhav Kapoor, member of Varanasi-based Silk Traders Association. ?The anti-dumping duty pushed raw silk prices, which led to increased price of finished goods. This, in turn is affecting the silk weavers and exporters,? he said.

Meanwhile, state-owned Central Silk Board cahirman H Hanumanthappa has said that the anti-dumping duty on the contrary has affected exporters. He said the main purpose of anti-dumping duty was to safeguard the interest of local sericulture farmers and weavers. China was dumping raw silk at cheaper cost that forced the Indian farmers to sell their produce at rockbottom levels. After the dut was imposed, Indian farmers are getting lucrative prices. Now the CSB has filed a petition with the Centre to extend the anti-dumping duty on raw silk by five years after its expiry in December 2008.

The CSB chairman, however, said the silk exports will decline in the current financial year not because of anti-dumping duty but due to global economic turmoil.

The government has set a target to fetch a foreign exchange of Rs 3,970 crore through silk exports in the current fiscal. However, according to Hanumanthappa, silk exports may touch only Rs 2,500 crore this year as orders from the US and European countries have declined sharply.

The government should impose anti-dumping duty only if the local raw silk production was adequate to meet the demand, said Suresh Mehtha, spokesperson of Indian Silk Association. There was no other option for India other than importing silk yarn from China as the local production is not matching the demand, he added.

He also said the government has imposed 31% duty on raw silk but only 10% on fabric. The government should either raise the duty on fabric or reduce the duty on raw silk matching the duty structure of the fabric.

In 2006, the government imposed anti-dumping duty on Chinese silk fabric weighing 20-100 gm per meter. The duty was imposed taking into consideration the dumping margin ranging from 57% to 115%,according to the weight and variety of fabrics being imported.

However, silk imports attract zero duty under the Duty Free Import Authorisation (DFIA) scheme if it was re-exported with value addition. But most of the weavers and small exporters here are not manufacturers and hence they are not in a position to import duty-free raw silk/yarn from China, said Mehtha.

The weavers procure yarn from the importer to cater to the needs of the domestic market while the exporters procure their requirements from local manufacturers and trade in the international market, he added.

He said the anti-dumping duty levied on raw silk has brought no benefits to the Indian silk industry.

According to the textile ministry sources, India imported 9,258 tonne of raw silk in 2003-04 while it marginally declined to 7,948 tonne in the next fiscal. It again surged to 8,383 tonne in 2005-06 and stood at 7,922 tonne in 2007-08

While the government has imposed anti-dumping duty, it failed to increase the silk production in the country, said TV Maruti, ex-chairman of Indian Silk Export Promotion Council.

Of the total requirement of 26,000-28,000 tonne of silk, he said, India produces around 18,000 tonne. The remaining silk has been imported primarily from China.

According to CSB member M Sathiyavathy, the CSB has been implementing a scheme ?Catalytic Development Programme (CDP)? in collaboration with the state governments.

The CDP that was initiated during the 9the Five Year Plan is continuing in the 11th Plan with certain modifications. The Centre has approved the CDP at a total cost of Rs 1,476.24 crore for implementation during the 11th Plan, of which CSB share is Rs 661.62 crore. The remaining Rs 311.73 crore and Rs 502.89 crore will be borne by states and beneficiaries, respectively.

By the end of the 11th Plan, the government has set a target of touching a total silk production of 26,000 tonne and an export turnover of Rs 4,500 crore. But the official sources said the government could not even match its target in the initial year of the 11th Plan.

During 2007-08, the first year of the Eleventh Plan, the government could achieve only around 19,000 tonne against the set target of 20,375 tonne while fetching foreign exchange of Rs 2,727.87 crore against the set target of Rs 3,770 crore through silk exports, which is also down from the previous year?s exports value of Rs 3,338.35 crore.

The downtrend in the exports in the last fiscal was due to weak rupee value and this year it would be because of the global financial meltdown. The industry is expected to axe atleast 5-10 lakh jobs in the near future, industry sources said.