Round One To Banarasi Silk Industry.

 VARANASI: With slashing of basic custom duty on import of raw silk from China from 30% to 5%, Banarasi silk industry has won an important round. However, it is demanding that duty on silk fabrics must be increased by 40% to derive actual benefits and beat its arch rival China in the game.

"The long-pending demand of abolition of custom duty on raw silk has almost been accepted as it has been reduced from 30% to 5%. It will bring down the price of Chinese raw silk that had increased from Rs 1,750 per kg in August 2010 to Rs 3,300 per kg in December 2010, a whopping and incredible increase of 88%, bringing the industry on the brink of disaster," said convener of Yarn Development Committee, Banarasi Vastra Udyog Sangh, GK Kediya. "It is an appreciable step for promoting the cause of world's oldest and largest cottage industry," he told TOI.

Those associated with the Banarasi silk industry, particularly Banarasi Vastra Udyog Sangh (BVUS), have been demanding that custom duty on raw silk should be abolished or brought down at par with general category. Their demands also include increase in anti-dumping duty on silk fabrics up to 40% and abolition of anti-dumping duty on raw silk.

According to Kediya, the battle has been won, but the war continues. "It is China's policy to monopolise export trade of silk fabrics in the world. India is the main rival of China in this sector," he said and added China was exporting silk fabrics at a price that did not cover even the cost of raw material consumed. It dumped its silk fabrics in India, resulting in closure of thousands of power looms in Varanasi and Bangalore. "China took full advantage of our inverted duty structure, under which 30% duty was levied on raw material and only 10% on finished products," he said.

"But, the government has gone only half way," he said and added while custom duty on raw silk had been significantly reduced, duty on silk fabrics had not been raised to 40% as demanded. Soon after the announcement, China immediately raised booking price of raw silk by four dollars and swallowed 40% benefit of duty reduction, he said. "Unless the Central government dealt with the matter strategically and hits China where it hurts, the problem will not be solved. It is imperative that duty on silk fabrics is immediately raised to 40%," he pointed out.

The BVUS also demands increase in export duty on cotton and cotton yarn, credit cards to weavers to purchase yarn on loan at cheap interest rates and arrangements of depots to facilitate easy availability of cotton and silk yarns to weavers in the areas where weaving is done both on handloom and power loom.

Before the budget, the ministry of textile had also announced in the Parliament in August last that India would import 2500-MT high quality silk from China for distribution among weavers in famous silk centres of Kanchipuram and Varanasi. The National Handloom Development Corporation (NHDC) has been assigned to import duty free raw Chinese silk to facilitate the weavers and give a boost to the domestic silk industry.

According to assistant director (handloom) KP Verma, each handloom would get four kg silk yarn per month under the provision.

Regarding other demands of BVUS, Kediya said due to imposition of anti-dumping duty on raw silk, import of silk fabrics had increased by 400%. Thus, weaving industry was in trouble. The anti-dumping duty was imposed on silk fabrics on April 27, 2006. At present, no anti-dumping duty was applicable on 60-gm of 'crape' silk. China has kept prices of silk fabrics at a level where it is not applicable.

'Opposition by Karnataka sericulturists misleading'

"There is information that the sericulturists and reelers of Karnataka are opposing the reduction in custom duty on raw silk imported from China," KG Kediya said, describing it as misdirected, ill-conceived and unscrupulous.

According to him, the domestic raw silk producers are reaping rich harvest. The domestic raw silk producers keep their prices only slightly below the market price of Chinese raw silk. As a result, without any increase in their cost of production, simultaneously with the increase in prices of Chinese raw silk, they also increased their price by almost Rs 1,500 per kg, keeping in pace with increase in price of Chinese raw silk, which was available at Rs 1,750 per kg in August 2010 and reached peak price of Rs 3,300 per kg in December 2010. This is pure profiting and an act of depriving weavers, specially in handloom sector. Domestic raw silk is not used on power loom in Varanasi.

"They have just come out in opposition of abolishing custom duty on imported raw silk as it will bring down its price and they too will have to reduce prices," he said and added they should understand if there was no weaving, where would raw silk be consumed. "In fact, they should increase the production so that gap of 10,000 MT between production and consumption can be bridged," he said. Present consumption is 28,000 MT while production is 18,000 MT. Besides, there is no competition between domestic and imported raw silk. Domestic raw silk cannot be used without twisting, while Chinese raw silk is being used in Varanasi without twisting.


Source : timesofindia.indiatimes.com