Government needs to focus on man-made textiles, must increase duty on its imports: CITI

By: | Published: February 19, 2019 1:22 AM

Globally, fibre consumption is dominated by man-made fibres (MMF), having 70% share in the total fibre consumption, while natural fibres constitute only 30% .

fibre, fibre consumption, cotton, textile industryContrary to the global trend, fibre consumption in India is skewed towards natural fibres, especially cotton.

It is high time India must focus on man-made textiles, along with cotton ones, to achieve the desired target of $300-billion market by 2025, said the Confederation of Indian Textile Industry (CITI).
Globally, fibre consumption is dominated by man-made fibres (MMF), having 70% share in the total fibre consumption, while natural fibres constitute only 30%.

Contrary to the global trend, fibre consumption in India is skewed towards natural fibres, especially cotton. The growth of cotton is limited owing to low agricultural land availability and price volatility. Hence, it had become important for India to focus on man-made textiles along with cotton ones, said Sanjay Jain, chairman, CITI, on Monday.

Jain also expressed concerns over rising imports of man-made textiles after the implementation of the good and services tax (GST). In the post-GST regime import of yarn, fabrics and garments has increased substantially by 60%, 12% and 29%, respectively. The government should increase the import duty on MMF-based spun yarn and fabrics as huge surge of imports has been seen in this category post-GST which is impacting spun yarn and fabric manufacturers in a big way.

Rakesh Mehra, convenor, sub-committee on MMF and yarn, CITI, said the downstream industries in the MMF textile value chain – spinning and weaving — which is also the largest employment generator in the entire value chain, are facing acute stress due to high prices of domestic staple fibre. He said this affected export competitiveness of the domestic downstream MMF textile industry and also made the sector venerable to imports of value-added MMF products.

Mehra also said anti-dumping duties in the beginning of the textile manufacturing chain hurt the downstream sector.

Currently, anti-dumping duty on purified terephthalic acid (PTA) is `4-6 per kg and `12 per kg on viscose staple fibre (VSF).

India has a huge and efficient capacity in manufacturing polyester staple fibre and VSF. Moreover, import of man-made staple fibre in 2017-18 stood at 149 million kg which is less than 15% of the total man-made staple fibre consumption in India.

Hence, it has been suggested that the government may abstain from enhancing custom duties and levying anti-dumping duties on staple fibres. This would allow the downstream industries along the value chain to grow, he added.

According to Jain, the inverted duty structure in the case of MMF textiles has led to the GST being put on capital goods, services and certain inputs being added to cost in the hands of the MMF textile buyer. These taxes are not considered for the calculation of refund of input tax credits. This has made MMF textiles costlier. This will curb further expansion in MMF textile value chain. The refund of input credits due to this is a tedious task and the smaller players are unable to avail it and those who are getting refund are facing liquidity stress. These issues were responsible for the import of MMF yarn and fabric becoming viable and preferred, he added.

Based on the analysis of China’s export of MMF textiles and clothing, the share of value-added products such as fabric, apparel and home textiles is 85%, against 65% in India.
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.

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