India Budget 2024-25: Fabric makers want restrictions on dumping

Ashish Gujarati, the vice president of the Southern Gujarat Chamber of Commerce and Industry (SGCCI), told Fibre2Fashion, “The finance minister should impose Minimum Import Price (MIP) on all types of fabric under various HSN codes. After imposing MIP on certain codes, there is huge scope of manipulation in different types of fabric. Under invoicing of imported fabric is still a big problem. The government’s measures to impose MIP on certain HSN codes failed to boost demand of domestic textile value chain. It indicates that Chinese manufacturers are still dumping cheaper fabric in the Indian market.”

Gujarati stressed that the government should not include fabric and garment in free trade agreement (FTAs) with various countries. Domestic industry is getting severely hurt due to huge imports of these products. He also suggested that the government should come out with a special incentive scheme for weaving and knitting industry. He explained that the Indian fabric industry has been sandwiched between dominance of yarn and fibre producers and slow demand from garment industry. “Fabric industry is suffering as fabric and garment imports are eating domestic market.”

He suggested that the finance minister should defer MSME payment rule at least for one year and it should be implemented in phased manner so industry and trade can shift their business from longer credit to short credit system. Moreover, the industry expects the government to ensure availability of raw material at international prices and quality. The Indian industry is lagging behind in export market due to higher cost of production, and is unable to compete with exporters of other countries.

Gaurang Bhagat, President of Gujarat-based Maskati Cloth Market Association has strongly demanded imposition of anti-dumping duty (ADD) on fabric imports from China. “The government should act swiftly and impose ADD immediately as Chinese suppliers are dumping cloth at very lower price compared to domestic prices.” Regarding MIP, he echoed Gujarati and said, “There is a possibility to manipulate in HSN code to evade duty and under-invoice the inbound shipments. Huge import of fabric has left the domestic textile industry in crisis.” He said that domestic spinning, weaving/knitting and dyeing and processing industries are facing slow demand as finished fabric is available at cheaper prices.

Subir Mukherjee, Business Head-Denim at Bhaskar Industries suggested duty free import of cotton for fabric exports to neutralise the duty impact on fabric exporters. The government can also consider alternatively to refund import duty to the exporters who shipped fabric from the country. He argued that duty drawback and RoDTEP (Remission of Duties and Taxes on Exported Products) do not compensate import duty on cotton.

He also demanded that RoDTEP value cap for chapter 5211 to be increased from ₹3.40 per square metre to the same level as chapter 5209 (₹12.5 per square metre). Denim export under chapter 5211 are more than 40 per cent of total denim exports from India.

He said that duty free import should be allowed only if fabric origin is Bangladesh or India. “We need to stop Chinese origin fabric entering into India through the Bangladesh garmenting route. Indo-Bangla textile trade should be in Indian rupee instead of USD. It will give significant cost advantage, as in many transactions there are multiple US intermediary banks involved which adds cost of $100-150 per transaction.”

“Most global customers are looking for superfast order execution. Since our denim garment capacity is minuscule, we access the international market primarily through Bangladesh. Our main competition with local Bangladeshi mills is due to the long and unreliable transit time from India to factories in Dhaka. Given the average distance of about 2,000 km from Indian mills to Dhaka factories, we should aim for ex-mill to in-factory delivery within 5-7 days. This will boost our competitiveness against China and Bangladeshi local mills. Major investments are needed for roads and warehousing facilities on both sides of the border (Petrapole/Benapole) with Bangladesh. The last ten kilometres to the border on the Indian side should be under CISF protection to mitigate hassles faced by exporters,” Mukherjee added.

Fibre2Fashion News Desk (KUL)