CITI Appreciates Increase Of Basic Customs Duty On Import Of Certain Textile Items

The Chairman of The Confederation of Indian Textile Industry (CITI), Sanjay Jain, appreciates the revision of customs duty on import of textiles goods from other countries. He 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 India against increasing imports, post the Goods and Services Tax (GST).

Countervailing Duty (CVD) and Special Additional Duty (SAD) applicable on imports had been abolished making imports cheaper by about 15 per cent. Jain thanked the Finance Minister, Textile Minister and Commerce & Industry Minister for increasing BCD to protect the fabric producers of the country. He said, “It's a very positive and welcoming step by the Government of India and will go a long way fulfilling Make in India, Skill India and India as a global textile hub.”

The announcement has given the textile fabric industry a big relief as it was going through tremendous pressure post-GST regime and it will also help the industry to strengthen itself in the domestic as well as international markets, according to CITI.

Jain stated that the announcement will 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. “The duty increase is mainly in manmade fiber-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,” he added.

Problems:

Though it is a big relief to the industry, problems on imports are not fully over. There is a big issue of imports from FTA countries like Bangladesh and Sri Lanka where there is full exemption from Basic Customs Duty and hence it is a gateway for Chinese fabric entering India duty-free in the form of garments. This is because no Rule of Origin Rules is available for the duty-free imports from these SAARC countries. “We have FTAs with certain other Asian countries which allow certain duty-free imports which impact 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 to 7 per cent,” added Jain.

CITI hopes that the problem of non-refunded GST on inputs for fabric manufacturers gets resolved at the earliest so that the disadvantage against imports is taken care of.