Imports of polyester yarn from India increased 193 per cent from July 2018 to July 2019.Similarly, viscose yarn imports shot up 342 per cent from July last year to July 2019.

Between July 2018 and June 2019, there has been a substantial rise in the imports of all manmade fiber products. Manmade fiber yarn and apparel imports have gone up 83 per cent and 84 per cent. GST made imports more than 12 per cent cheaper.

Rising imports are impacting domestic yarn and garment manufacturers in a big way and are acting as a big disincentive for the upstream industry from investing. There are certain structural issues like relatively higher fiber, power and interest rates, which have made the upstream industry costlier and hence attracting cheaper imports from other countries. Further, under GST, manmade fiber textile products suffer from an inverted duty structure as manmade fiber, yarns and fabrics attract GST at the rate of 18 per cent, 12 per cent and 5 per cent respectively. This has resulted in heavily blocking working capital. Plus the GST paid on capital goods, services and certain inputs is being added to the cost of the manmade fiber textile buyer. These taxes are not considered for calculation of refund of input tax credits and have made manmade fiber textiles costlier.