Between May and September 2019 India’s imports of viscose yarn were 195 per cent higher than the same period last year. In July 2019, imports were 342 per cent higher and August saw a 816 per cent rise. China and Indonesia have been dumping cheaper yarn into the country affecting the spinning industry severely. India is self-sufficient in yarn and does not need imports. While most spinning mills are running on lower capacity, some smaller mills in South India are facing a tough time. Availability of cheaper viscose yarn will also affect cotton yarn demand as fabric makers will use more viscose than cotton in their products. The industry wants an anti-dumping duty on yarn as well, the total tax incidence to be 15 per cent or at least 10 per cent on yarn to deter increasing imports.
But this will put the industry in a difficult situation. If yarn duties are increased, either fabric imports will go up or the entire value chain will become costlier, affecting the competitiveness of Indian products in the global market. But if the duties remain the same, imports will continue to impact the domestic spinning industry.
While the US-China trade war has slowed down the demand for viscose yarn globally, India has been witnessing dumping of viscose yarn.