The central government has decided to increase the basic customs duty on polyester fabric to 20 per cent, from 10 per cent, with effect from last Friday.
In the Goods and Services Tax regime, countervailing duty has been replaced with Integrated GST and Special Additional Duty (SAD) has been scrapped. Polyester fabric attracted 10 per cent basic customs duty, 12.5 per cent countervailing duty and four per cent SAD in the pre-GST regime.
After scrapping of the SAD and levy of five per cent GST on the fabric, the imported variety attracted 10 per cent basic customs duty and five per cent IGST. This was a significant drop and the domestic manufacturing industry had petitioned in alarm, to stop cheaper import, especially from China. The industry had represented to the government and the GST Council to increase the basic customs duty.
P Nataraj, chairman, The Southern India Mills’ Association said the price of man-made fibre in India was higher by 20-30 per cent, due to high incidence of duties and levies, than abroad. So, there was a threat from import. He added there was also a need to increase the import duty on cotton fabric, at par with polyester fabric, in the interest of the power loom and handloom sectors.