The Chairman of CITI, Mr. Sanjay K. Jain, has appreciated the revision (upward) of customs duty on import of textiles goods from other countries. He has stated that CITI has made a number of representations to the Finance Minister, Textile Minister and Commerce & Industry Minister to increase Basic Customs Duty (BCD) to safeguard the fabric producers of the country against increasing imports especially post GST regime as CVD & SAD applicable on imports had been abolished making imports cheaper by about 15%.
Mr. Jain has thanked the Finance Minister, Textile Minister and Commerce & Industry Minister for increasing the Basic Customs Duty to protect the fabric producers of the country. He also stated that it’s a very positive and welcome step by the Government of India and will go a long way fulfilling the Make in India, Skill India and India as a Global Textile Hub, initiatives of the Hon’ble Prime Minister of India. He further stated that the announcement has given the textile fabric industry a big relief as it was going through tremendous pressure post GST regime and that the announcement will help the textile industry to strengthen itself in the domestic as well as international markets.
It will also help increase fresh FDIs especially in the fabric sector which will help the textile industry enhance its capacities to meet future challenges and opportunities arising in the domestic and foreign markets and penetrate new markets. The duty increase is mainly in manmade fibre based fabric, which is a weak link in the country and needs a lot of investment to increase Indian textile industry share in the MMF category.
However, though it’s a big relief to the industry, problems on imports are not fully over, he said. There is a big issue of imports from FTA countries like Bangladesh and Sri Lanka where there is full exemption of Basic Custom Duty and hence it’s a gateway for Chinese fabric entering India duty free in the form of garments. This is because no Rule of Origin Rules are there for the duty-free imports from these SAARC countries. Also, we have FTAs with certain other Asian countries which allows certain imports duty free which impacts the domestic industry. Further duty increase in BCD still doesn’t bring the overall import duty rates to pre-GST level, hence the industry is relatively still at a disadvantage post GST by about 5 – 7%.
He also hoped that the problem of non-refund of GST on inputs for fabric manufacturers is resolved at the earliest, so that the disadvantage against imports is also taken care (fabric imports carry 5% IGST while due to inverted duty structure domestic manufacturers’ effective IGST is in the range of 7 to 9%).