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Cheaper yarn imports hurting domestic textile players

Imports of cheaper yarn from countries such as China and Indonesia are hurting India’s textile industry. A large number of small and medium yarn producing units are on the brink of closure, said experts.

Viscose staple fibre (VSF) yarn imports have surged about 200% year on year in the first five months of this financial year, touching a record 8,029 tonnes in August for an average monthly demand of 50,000 tonnes .

Imports of cheaper yarn from countries such as China and Indonesia are hurting India’s textile industry. A large number of small and medium yarn producing units are on the brink of closure, said experts.

Owing to the US-China trade war as well as free trade agreements with ASEAN countries that allow duty-free imports into the country, viscose staple fibre (VSF) yarn imports have surged about 200% year on year in the first five months of this financial year, touching a record 8,029 tonnes in August for an average monthly demand of 50,000 tonnes.

At the same time, demand for the yarn has remained steady, growing at a compounded annual growth rate of 14% in the past five years. An industry insider said that excess capacity in China is more than the Indian demand for the fibre and with so much oversupply through cheaper imports, domestic manufacturers are forced to match the low price that is taxing them heavily.

There is currently a 5% duty on imports of VSF yarn and the industry is pleading to have government increase this to 10-15%. “These are not easy days. There is at least one month of unsold inventory across spinners, large and small,” said Ramesh Natarajan, secretary of Indian Manmade Yarn Manufacturers Association.

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