Manufacturers Fear Competition from Imported Fabrics Post GST

INDIA NEWS

Manufacturers Fear Competition from Imported Fabrics Post GST

July 24, 2017



In the case of apparel imports, the government had earlier levied the Special Additional Duty (SAD) as a protection for the domestic players. With the GST, this duty protection stands removed and imported garments would be 5-6% cheaper. The Textile Industry fears that there will be an increase in imports from countries such as Bangladesh and China, where the cost of manufacturing is lower due to the availability of cheaper labour. Prior to the GST, the countervailing duty included six per cent excise duty on cotton and 12.5 per cent with Cenvat credit on polyester. The optional duty of two per cent with abatement of 40 per cent on it (i.e. 0.80 per cent) meant effective duty of 1.2 per cent without Cenvat credit. Around 4 per cent Special Additional Duty (SAD), along with cess, educational cessand others worked out to 5.5 per cent. Prior to the GST, traders had duty protection of 5.5 per cent from cheap import. After the GST, all duties have been subsumed in 5 per cent of the GST for both domestic manufacturers and importers. This, in effect, means no protection, as both domestic manufacturers and importers will be required to pay the same duty.

Meanwhile, Head of the Textile Division, FICO (Federation of Industrial and Commercial Organization), Ludhiana, AjitLakra, had written to the government, expressing the concern of the Textile Industry on the issue of cheap imports. The imported polyester fabric would be cheaper than the made-in-India polyester fabric.