Banarasi silk faces threat from dragon.

VARANASI: The famous Banarasi silk industry is facing impending danger from the Chinese dragon that is capturing the domestic market mainly due to the wrong policies of the Indian government.

"The textile industry of Varanasi is in serious crisis due to inverted duty structure on raw silk and silk fabric imported from China," said convener of Yarn Development Committee, Banarasi Vastra Udyog Sangh, GK Kediya. The present structure is helping China to monopolise export market of silk fabrics. All over the world custom duty is low on raw material and high on finished goods so that cost of domestic production remains lower than imported product. "Unfortunately the government of India is running in reverse gear. While on raw silk custom duty is 30 per cent, there is only 10 per cent duty on silk fabrics. As a result, China is exporting silk fabrics at a price which does not cover even the cost of raw silk consumed, what to speak of manufacturing expenses and profit. It is China's policy to monopolise export market of silk fabrics. With that strategy in mind, it is regularly increasing the price of raw silk, making it beyond us to export silk fabrics," said Kediya and added the Chinese raw silk, which was available at Rs 1,750 in August, was now available for over Rs 3,200 per kg.

The government is not even earn a revenue by levying custom duty on raw silk due to some malpractice. According to Kediya, 80-90 per cent import of raw silk is through duty-free advance licences that which are issued against commitment of export of silk fabrics. "Due to abnormally high prices of raw silk, both Chinese and domestic, we are in no position to export pure silk fabrics in comparison to China's cheap prices. China is continuously increasing the price of raw silk to wipe out India from silk fabrics export market," Kediya claimed. He alleged that almost all advance licences were being fraudulently issued. "The persons to whom advance licences are issued are not regular importers and they sell the licence at a premium. The buyers of licence import raw silk and sell it in the market after adding expenses and profit. They keep it near the basic booking price plus custom duty. A thorough probe should be made into what percentage of export commitments are being fulfilled and the guilty should be punished," he pointed out.

Another anomaly leading to inverted duty structure is that there is only 21 per cent custom duty on twisted raw silk against 30 per cent on raw silk. Cheap import of twisted raw silk, in comparison to raw silk, has put an end to all twisting units. In 2008-9, 8392 MT was imported at a cost of 380 million dollar (Rs 1,700 crore). Due to increase in prices, by paying the same amount, only 7,340 MT was imported in 2009-10. "It shows an increase of 23 per cent in the price in 2009-10 against those in 2008-09. In 2010-11, still much less quantity will be imported by paying the same amount because of 65-70 per cent increases in price," he said.

Rajni Kant of Human Welfare Association (HWA), who played a key role in getting Geographical Indication (GI) for Banarasi saree and brocade, said the increasing price of the yarn was providing a fatal blow to the Banarasi silk industry. He alleged that there was an international conspiracy to destroy the domestic silk industry. Banarasi Vastra Udyog Sangh, in its letter to the finance minister and minister of commerce and industry, has urged that the custom duty on raw silk should be abolished or brought at par with the general category, anti-dumping duty on silk fabrics should be raised to 40 per cent and anti-dumping duty on raw silk should be abolished.


Source : timesofindia.indiatimes.com