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Textile ministry considers duty cut as Indian garment sector loses out due to heavy fibre duty |
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CHENNAI: The textile ministry is in consultation with the finance and revenue departments to examine the possibility of a duty cut on man-made fibre as high cost of the key raw material for making blended garments is making Indian goods uncompetitive in the global market.
While man-made fibre draws an excise duty of 12.5 per cent, it has elaborate import restrictions, leading to a cumulative duty of 29 per cent. Viscose fibre, one of the most common man-made fibres, attracts an anti-dumping duty, which takes its total duty up to 46.3 per cent.
According to World Trade Organisation data, among southeast Asian nations, India has 5-10 per cent customs duty on many of the fibres, while its competitors such as Thailand, Indonesia and Vietnam have lower duty structures ranging from zero to 5 per cent.
The textile industry, which has been intensely lobbying for duty cuts on both domestic and import fronts, had been given hope during the previous year's budget, but the decision is yet to arrive.
"We are pursuing the matter with the ministry of finance. Since the proposal is for a rate cut, which is an issue of revenue loss for the government, it is taking time," said SK Panda, secretary, ministry of textiles. The cost of one kilo of viscose fibre is around Rs . 155, while the same material costing Rs. 111 in China, expressed in Rs will cost Indian currency. Taking into account the import duty on the fibre, foreign shipments cost as much as the Indian produce. But tonnes of the material are being imported by Indian garment makers as the global market for blended garments is surging and there are not enough Indian suppliers.
Each year, nearly Rs . 900 crore worth of man-made fibre material is imported by garment makers. Their clientele includes global retailers such as Walmart, British clothing company Next, German and fashion retailer s.Oliver. India exported Rs . 2,480 crore worth of man made fibre goods in April this year, a drop of 6 per cent compared with the same period last year.
On the MMF front, Indian exporters are losing business because of high input costs. "High costs have begun to take an effect. We see a lot of orders shifting to southeast Asian nations now," said Prabhu Damodharan, secretary, Indian Texpreneurs Federation.
Textile entrepreneur Milton John, whose Cotton Blossom India exports finished garments worth Rs. 200 crore annually, lost key client Walmart to a Cambodian competitor last month. "It was purely because of over high costs of sourcing associated with India-made blended garments," he said.
Source : economictimes.indiatimes.com
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