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Budget 2018: India's textile industry sinking post flood of imports

Post repeated calls from various industry groups, the government announced the enhancement of duty drawback rates to be effective from January 25, 2018. The enhancement of rates for 102 tariff items will definitely bring relief to all stakeholders. On the flip side, representatives from the textile industry have noted their "disappointment" with the government for ignoring the calls of an industry which has been "one of the most impacted by GST".

Confederation of Indian Textile Industry (CITI), president, Sanjay K Jain is unhappy with the notification, "The notification just mentions wool items which is a very insignificant part of the textile industry. There is nothing on textiles. The textile industry is pretty disappointed that demands for increasing drawback or RoSL for yarn fabric and garments was not considered, despite the industry being in a very difficult position post-GST."

The local textile industry is seeing the country increasingly getting flooded by imported material which is a serious concern for the SMEs operating in this sector. The national president of the Textile Association, Arvind Sinha decries, "Export incentives have come down and at the same time import barriers have gone down which has resulted in imports going up by 20 per cent already, and in some cases like in Bangladesh garments have increased by 50 per cent. Exports are coming down every month."

A decline of 3 per cent in CAGR in textiles and apparels in the month of December last year as against the corresponding period in 2016 has been reported. Exports came to $2996 million during December 2017 when compared to $3075 million in December 2016. Jain echoed the concerns of the industry, "The effective GST duty on fabric is 5 per cent officially, but because of the non-refund of excess input tax credit under inverted duty structure, it actually adds up to 8-9 per cent.

This is making us lose to imports because they only pay 5 per cent IGST." Sinha also shares the same view, "We need genuine duty exemption in exports because money is getting stuck for manufacturers."