CMAI has urged the government to consider levying a temporary additional COVID-19 import duty on garments for 12 months. According to the submission made to the Textile Ministry and Ministry of Commerce and Industry, the apex body has suggested a short-term duty on imports of both readymade garments and fabrics from all countries, including those with who India has zero-duty agreements. This move comes as the domestic garment manufacturing industry anticipates a slowdown in demand for a year severely impacting business.
The additional duty will result in a level-playing field for domestic manufacturers, and help them compete with the Bangladesh garment industry, which has currently at least 15 per cent cheaper production cost. Additionally, the levy will enable the government to collect approximately $100 – 150 million for its fight against COVID-19 (depending on the quantum of duty imposed).
A recent study by CMAI estimates that there will be about 40 per cent drop in domestic demand of apparel due to lockdown and reduced demand as a result of the pandemic. Over 20 per cent domestic units may face closure, being unable to survive the current crisis. The reduction in demand and revenue levels will lead to downsizing of operations, closure of units and job losses in Indian textile and apparel industry to the tune of one crore across the entire textile value chain.
CMAI had been engaging in dialogues with the government over the challenges and impact of duty-free imports of garments from Bangladesh, and back-door entry of Chinese fabrics on the MSME-dominated domestic garment industry for some time now.