The upcoming GST council meeting may witness some important decisions being taken, which will help improve the competitiveness across the entire textile value chain. This was hinted by a top government official.
Yarn, which is one of the main product segments of textile industry, has no duty, while its immediate raw material, Polyester Staple Yarn (PSY), is being imported at full duty of 5.5 per cent as it is not included in the FTA list of items.
This has denied a level-playing field for the spinning mills as compared to their counterparts in Indonesia.
Indian textile industry has urged the Government to ensure level-playing field for improving the competitiveness of the polyester yarn and acrylic fibre sector.
The industry is worried as the anomaly in the FTA agreements with Indonesia and Vietnam is leading to the closure of MSME spinning mills.
Due to the ASEAN FTA, it was explained that due the inclusion of the finished product of the mills, that is, polyester staple yarn in the list of items in the said FTA, it has been cleared of imports with ASEAN certificate at zero duty rate.
Hence there has been a surge in imports particularly from Indonesia and Vietnam, mostly in the post-GST period.
Sanjay Garg, President, The Northern India Textile Mills’ Association (NITMA) and other members of the association also met Ravi Capoor, Textile Secretary in this regard.
The Textile Secretary informed that important decisions are expected in the next GST council meeting, which will further help mprove the competitiveness across the entire textile value chain.
NITMA suggested for immediate exclusion of PSY from the FTA list or inclusion of its raw material, the PSF, in the FTA list of items. This would allow strengthen the vision of ‘Make in India’ and also provide the much-needed competitiveness to the spinning mills products, which has been undergoing stress due to this grave anomaly, affecting its future and survival.
The Textile Secretary assured that as far as GST issue is concerned, important decisions are expected in the next GST council meeting, but it may be difficult to make the changes in the ASEAN agreement and it may also take little longer to review the current ASEAN Trade agreement.
He suggested NITMA to point out some Non Tariff Barrier (NTB) measures, such as checking the quality standard of the imported yarn, which if introduced as a compliance measure could help reverse the hike in imports yarn.
NITMA also highlighted that the imposition of anti-dumping duty (ADD) on the acrylic fibre, has been continuing for the last 23 years against almost all exporting countries, hence making the raw material costly for domestic acrylic yarn making sector and also making the value-added downstream sector uncompetitive and its future growth uncertain. Compared with Bangladesh, which exported US $ 2.5 billion worth sweater products, India only exported US $ 0.07 billion in 2018, though both were at par in 1992.