Sharp rise in imports of MMF yarn, cotton fabric post GST:CITI

Inward shipments of cotton yarn, man-made yarn and fabric have gone up dramatically post GST from July, textile industry body CITI said today.
In a statement, the Confederation of Indian Textile Industry (CITI) said it has requested commerce and textile ministries to raise import duty on man-made fibre (MMF) yarn, cotton fabric and MMF fabrics by 15 per cent to ring-fence local yarn, fabric and garment producers from the threats of cheaper import, especially from FTA nations such as Bangladesh and Sri Lanka.
According to data shared by CITI, the import rose during July, August and October, but September figures were not available.

India's MMF yarn import hit USD 14.97 million in July as opposed to USD 8.92 million in the same month last year. Cotton fabric import showed the same trend, up at USD 12.81 million in July against USD 8.84 million last year. MMF fabric import stood at USD 8.27 million compared to USD 6.36 million in July 2016.
Similar conditions prevailed in August.
The overall import of textile yarn fabric and made-up articles stood at USD 153.9 million in October as against USD 137.31 million in the previous year.

"The government recognising the problem and threat of imports flooding the market has recently increased import duty on MMF Fabric from 10 per cent to 20 per cent. However, the import duty on MMF yarn and cotton fabric have been kept at the old rates," CITI Chairman Sanjay Kumar Jain said.

Jain held that the current scenario is impacting domestic yarn and fabric producers and garment manufacturers.
He felt that there is a greater need to apply safeguard guidelines such as Rules of Origin, Yarn Forward and Fabric Forward Rules on countries such as Bangladesh and Sri Lanka that have FTAs with India to stop routing of cheaper fabrics made in China through these nations.
Post rollout of the Goods and Services Tax (GST), there has been a spike in import of MMF yarn, cotton fabric and MMF fabric in July and August 2017, Jain stated. Prior to GST, import of textile products had been attracting basic Customs duty (BCD) plus countervailing duty (CVD) and special additional duty (SAD). Post-GST, CVD and SAD were withdrawn and IGST was introduced.

He pointed out that MMF yarn, cotton fabric and MMF fabric are largely affected by cheaper imports from China, Indonesia, Thailand and North Korea where fabric industry is subsidised substantially to increase their share in the world trade.