An Indian trade association has strongly urged Prime Minister Narendra Modi to step in right away, stating that a flood of knitted fabric at below-cost prices from China is seriously harming both indigenous industry and the government coffers.
The weak demand for exports and the overabundance of imported clothing and fabrics are putting double pressure on the Indian textile sector. As per the All India Knitters Association, the domestic need is being drained by imported supplies.
The association conducted a survey and found that the annual loss resulting from the import of cheap synthetic knit fabric from China is Rs. 5,700 cr ($685 mn).
In a letter to the Prime Minister’s Office (PMO), the association explained that 74 per cent synthetic knitted fabrics was imported under HSN code 60063200 (other knitted or crocheted fabric of synthetic fibres-dyed) out of total synthetic knitted fabric during April-August 2023 at an average price of $1.41 per kg. In comparison, domestic production cost is currently hovering at $4 per kg.
It said that polyester yarn is being traded at higher price than the imported fabric landed cost. Domestic production cost of $4 per kg includes polyester yarn price of $1.50 per kg, average upcharge for spandex $0.37, knitting cost $0.43, dyeing, printing & finishing cost $1.22, weight loss in process $0.24 and nominal profit $0.24 per kg. Therefore, any import below the production cost should not be allowed in the country.
The government is losing revenue both in terms of basic custom duty (BCD) and GST. It is also losing revenue on direct taxes just because of undervaluation, the association president Raj Kumar Agarwal said in the letter to the PMO.
The per day import of synthetic knitted fabrics jumped 111 per cent to 686 tons in last four years. But the import of synthetic knitted fabric under HSN code 60063200 jumped 148 per cent to 504 tons per day. On the other hand, average import price of fabric under HSN code 60063200 dropped 40 per cent to $1.41 per kg during last four years. The average price was $2.35 per kg in 2019-20, the letter said.
The association said that India’s domestic industry is losing market share due to unfair competition. More importantly, under-invoiced import of goods is eating domestic demand. The body demanded that the government should immediately take steps to restrict the import of synthetic knitted fabric from China below cost price. It suggested that the government should impose anti-dumping duty (ADD) immediately.
It also suggested that quality control order (QCO) should be implemented on finished products rather than on raw materials like fibre and yarn. It will promote value addition through manufacturing in the country as per the PM’s ‘Make in India’ policy. The association requested PMO to convene a meeting to discuss this urgent matter at the earliest.
