Published
Dec 5, 2017
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Indian textile imports to rise

Published
Dec 5, 2017

Textile exports have decreased but imports are on the increase following the implementation of the Goods and Services Tax (GST) which has significantly lowered import duties.

Textile imports are increasing in India - Sagar Sarees- Facebook


Imports of cotton textiles increased by 45 percent in July and by 29 percent and 12 percent for August and September. Yarn textile imports were also up by approximately 12 percent year on year this October. Import increases appear to be declining somewhat as the GST settles into place but they are still increasing none the less. One of the reasons for this is that, pre-GST, imported textiles had to pay three kinds of duty, basic customs duty (BCD), countervailing duty (CD), and special additional duty (SAD) but under the GST, rates are significantly lower with only BCD and an integrated GST (IGST) to pay.

With imported textiles flooding the market in India, there is concern that this will counteract the government’s “Make in India” campaign which aims to decrease imports and increase domestic production, especially of sustainable handloom textiles. It could also spell more hardship for domestic textile producers who are already struggling with higher tax rates. Bangladeshi textile imports are on the rise and there are complaints that Indian businesses that cannot produce such cheap textiles, may get squeezed out of the market which would lead to job losses.

“Unlike CVD and SAD, IGST is fully adjustable against GST liability on sale of the imported product. The government recognising the problem and threat of imports flooding the market has recently increased import duty on MMF (manmade fibre) fabric from ten percent to 20 percent. However, the import duty on MMF yarn and cotton fabric have been kept at [the] old rates,” said Sanjay Kumar Jain, the Chairman of the Confederation of Indian Textile Industry (CITI). The government is being urged to both address the import and export tax rates on textiles and their response will decide the fate of many in the industry.

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