The apparel industry of India has always been a dominant player in cotton garments and even though apparels made of man-made fibres are popular all over the world India is still not able to capture the segment.
The global market for MMF garments is $500 billion including $170 billion for sportswear.
The industry strongly feels that to be able to compete in the fast-growing, man-made fibre market globally, raw material cost for textile manufacturers in India should come down.
Moreover, it can happen only if anti-dumping duty (ADD) on viscose staple fibre (VSF) is scrapped.
Viscose spun yarn (VSY) imports were to the tune of 12,748 tonnes in September, a jump of 75 per cent over the same month last year.
The average monthly imports of VSY this year is 5,392 tonnes, up from 4,875 tonnes last year, according to data of Ministry of Commerce and Industry.
Given that ADD on Purified Terephthalic Acid (PTA) – the raw material for Polyester Staple Fibre was removed in the budget in February 2020, the textile manufacturing industry is now demanding withdrawal of ADD on VSF to help them stay competitive in the global market.
Due to the ADD on VSF ($0.103/kg to $0.512/kg on imports from Indonesia, Thailand and China), there has been large-scale import of viscose spun yarn.
Post withdrawal of ADD on PTA, there has been increase in production of polyester spun yarn (PSY) in India and imports have fallen benefiting weavers, knitters, dyers and other players in the PSF value chain.
Additionally, polyester fibre prices in India have come down to match China’s – Rs 65/kg, giving Indian spinners a competitive edge in export market, according to market sources.
The ADD on VSF was first levied in 2010 and ever since, the export competitiveness of players in the value chain have been hit, say observers.
As per industry data, the export of viscose fabric has dropped 25% between 2016-17 and 2019-20; exports of VSF based readymade garments have also fallen.
India’s high-cost raw material is the reason why the country is losing out to smaller players from Bangladesh, Vietnam, Sri Lanka, Nepal and Pakistan in the international market, according to textile manufacturers.
The massive import of viscose spun yarn coming in at a price that is 20% less than the manufacturing cost for the spinners, has created a turbulence in the sector.
Raja M Shanmugam, President, Tirupur Exporters’ Association, said, “Protectionism won’t work, global markets are connected.
Only if textile manufacturers in India get raw materials at competitive price, will they be able to compete globally and grab the opportunity that has opened up with anti-China wave across the globe.”
Due to higher cost of raw material, spinning mills are offering their yarn at a higher price compared to imported yarn from China.
But imported yarn is also having its own set of challenges including longer lead times and fluctuations in prices.
So, rather than restricting yarn imports, the government should remove ADD on viscose fibre and provide level playing field to spinners who in turn will be able to supply the yarn at internationally-competitive prices that will help SME weavers.
In India, there is only one manufacturer of VSF.
The price of the fibre from this player is Rs 115/kg; landed cost of imported VSF without ADD is Rs. 103/kg.
If ADD on VSF is removed, the VSF manufacturer will also be compelled to reduce price which will benefit yarn manufacturers, say industry veterans.
Speaking at a webinar on ‘Increase in Exports of MMF Garments’ hosted by AEPC, Reliance Industries Ltd and Alcis Sports Pvt Ltd, Dr Sakthivel said.
We have enough MMF fiber and yarn but we are not having sufficient fabric, especially fabric for sportswear and exports and thus both capacity and right pricing are must to become globally competitive.”
In India, there is only one manufacturer of VSF. The price of the fibre from this player is Rs 115/kg; landed cost of imported VSF without ADD is Rs. 103/kg. If ADD on VSF is removed, the VSF manufacturer will also be compelled to reduce price which will benefit yarn manufacturers, say industry veterans.
RD Udeshi, President (Polyester Chain), Reliance Industries Ltd. (RIL), said that Indian exports have remained constant over the last decade with mere 1% CAGR, “not a very healthy sign”.
Textile export of $36 billion in 2019 is only 4% of world exports.
“India has a very low value added end product exports and high share of raw material and intermediate product exports. Inadequate downstream processing capacity could be one of the key reasons for lower exports of value added items,” Udeshi said.
Gunjan Sharma, CMO (Polyester Division), Reliance Industries Ltd, said, “There are a lot of opportunities to capture in India. Our per capita consumption of synthetics is just about one-third of the global level and only one-fourth of China.”
Ravish Nanda, Co-founder, Alcis Sports Pvt Ltd, said, “We don’t have requisite R&D centers in India.
We use the best of the yarns made by Reliance even then we have problems in the final fabric and we don’t know how to solve these issues. India lacks a lot in processing.
We need help from countries like Taiwan and South Korea to help develop our infrastructure both in terms of technology and manpower.”