"According to Jain, the implementation of GST has led to an increase in import of all MMF products. Particularly, the imports of MMF yarn and apparels have increased by 83 per cent and 84 per cent respectively. The main reason for this increase is the removal of CVD post GST, which made imports cheaper by over 12 per cent."

Sanjay Jain, Chairman CITI recently requested the Government to extend a uniform GST rate of 5 per cent on MMF products including fibre, yarn and fabric. According to him, this would eliminate the accumulation of ITC. Jain also requested the Government to increase the import duty on MMF based Spun Yarn to 10 per cent as there is huge surge of imports in these categories post GST.

Jain further called for a higher drawback for value added industry to maintain a level playing field with global competitors. Further, all FTAs, need to take into account the size, importance and competitiveness of both the domestic and partner country industry before giving duty free access to the Indian market.

According to Jain, the implementation of GST has led to an increase in import of all MMF products. Particularly, the imports of MMF yarn and apparels have increased by 83 per cent and 84 per cent respectively. The main reason for this increase is the removal of CVD post GST, which made imports cheaper by over 12 per cent. Though the Government had increased the import duty on fabrics and garments to control this rise, it could not control the import of garments due to the FTAs.

From April-July 2019, the imports of polyester and viscose spun yarn increased by about 71 per cent and 78 per cent respectively as compared to the corresponding period last year. In the month of July alone, imports of both products increased exorbitantly by 193 per cent and 342 per cent, respectively as compared to the corresponding period of the last year. These rising imports are impacting the domestic MMF yarn and garments manufacturers and preventing the upstream industry from investing.

Jain also pointed out that MMF textile products suffer from an inverted duty structure as they attract GST at the rate of 18 per cent, 12 per cent and 5 per cent respectively. This blocks the working capital. The GST on capital goods, services and certain inputs further add to the cost in the hands of the MMF Textile buyer. These taxes are not considered for calculation of refund of input tax credits. This makes the MMF Textiles costlier to the extent of such un-refunded taxes.