The Indian textile industry is facing a major crisis due to increase in undervalued imports of Chinese knitted fabric mixed with woven fabric. This influx, estimated at 1000 metric tons per day, has crippled crucial sectors like dyeing, knitting, spinning, and fiber, pushing them towards closure.
Representatives from various textile associations and trade bodies raised this grave concern during a meeting held on January 18th. They highlighted the detrimental impact on domestic players:
Production Halt: New expansions under PLI and PM Mitra Park schemes have been put on hold due to unfair competition.
Revenue Loss: The exchequer faces an annual loss of INR 6,000-7,000 crores due to lost tax revenue.
Price Anomaly: The finished knitted fabric is being imported at prices equal to Indian spun yarn, raising suspicion of under-invoicing.
The primary reason for this crisis lies in the significant disparity between custom duties on woven and knitted fabrics. While woven fabric attracts a 20% duty with a cap, knitted fabric faces a 20% duty without any cap. This makes importing mixed fabric cheaper than importing woven fabric alone.
Industry experts proposed a straightforward solution: equalize the custom duties on both fabrics. This would level the playing field and curb under-invoicing. Additionally, setting a minimum import price of USD 4.5-5.0 per kg for knitted fabric was recommended R K Vij, representing TAI & NITMA, to ensure fair trade practices.
The meeting was attended by dignitaries like Piyush Goyal (Minister of Commerce & Industry & Textiles), Darshna Jardosh (Minister of State for Textiles), and Rachna Shah (Secretary Textiles). They acknowledged the issue and assured the stakeholders that it would be resolved within two months.
Sanjay Garg, President of NITMA, lauded the government's prompt response and expressed optimism about the future. He commended NITMA's year-long efforts in raising awareness about this issue and submitting detailed representations to relevant authorities.
The textile industry hopes that the government's swift action will address this critical issue and revive the struggling domestic sector.
