Government raises import duty on 328 textile products to curb imports

The move comes amid mounting concerns that a trade war between the US and China would further aggravate dumping of cheaper products from the world’s second-biggest economy despite a weak rupee.

By: ENS Economic Bureau | New Delhi | Published: August 8, 2018 1:05:27 am
Govt raises Customs duty on 328 textile products to curb imports India’s textile imports jumped by 16 per cent to a record billion in the last fiscal, with China accounting for over 40 per cent of the purchases, according to an industry estimate. (Representational)

India on Tuesday doubled import duties on 328 textile products to 20 per cent, the second such hike in a month, as the world’s largest cotton producer sought to curb soaring imports from China and focus more on local value addition in the labour-intensive sector.

The move comes amid mounting concerns that a trade war between the US and China would further aggravate dumping of cheaper products from the world’s second-biggest economy despite a weak rupee.

As such, India’s textile imports jumped by 16 per cent to a record $7 billion in the last fiscal, with China accounting for over 40 per cent of the purchases, according to an industry estimate. Also, industry executives have already warned that a 28 per cent hike in cotton prices by the government recently to ensure at least a 50 per cent premium to farmers over costs is expected to raise the basic raw material costs for domestic manufacturers and could hurt our export competitiveness across value chains in the textile and garment sector.

Earlier in the day, a notification to this effect was tabled by Minister of State for Finance Pon Radhakrishnan in the Lok Sabha.

The notification said it seeks to “increase customs duty on 328 tariff lines of textile products from the existing rate of 10 per cent to 20 per cent…under Section 159 of the Customs Act, 1962”. Increase in duties would give an edge to domestic manufacturers as imported products are currently cheaper.

Increase in manufacturing activity will help create jobs in the sector, which employs about 10.5 crore people. The textiles industry stated that the move would help promote ‘Make in India’ as imports of these goods had surged drastically in the last one year especially post GST.

“The decision would would help millions of people get employment in the manufacturing sector of the various segments of the entire value chain,” CITI said in a statement. The government last month had doubled import duty on over 50 textile products — including jackets, suits and carpets — to 20 per cent.

According to trade experts, India would not be able to give any direct export incentive to the textile sector, so there is a need to support the segment to encourage domestic manufacturing. —FE & PTI

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