Imports of cheap yarn from countries such as China and Indonesia are hurting India’s textile industry. A large number of small and medium yarn producing units are on the brink of closure.

Owing to the US-China trade war as well as free trade agreements with Asean countries that allow duty-free imports into the country, viscose staple fiber yarn imports into India have surged about 200 per cent in the first five months of this financial year. China, with its excess capacity, has been at the forefront of exports, followed by Indonesia, driving down the price of VSF yarn. At the same time, demand for yarn has remained steady, growing at a compounded annual growth rate of 14 per cent in the past five years. Excess capacity in China is more than the Indian demand for the fiber and with so much oversupply through cheaper imports, domestic manufacturers are forced to match the low price that is taxing them heavily. To have a level playing field the industry wants the import duty on VSF yarn to be hiked from five per cent to at least ten per cent.

There are around 600 small, micro and medium enterprises engaged in the spinning of yarn, which is used to make a fabric that finds use in garment-making.