The yarn industry recently urged the government to raise the basic customs duty on polyester yarns from 5 per cent to 10 per cent and modify the Free Trade Agreements (FTAs) with Vietnam and Indonesia to exclude this item from the list of items being cleared at zero duty in India or include raw materials for the yarn in this list. These steps will help domestic textile mills get a level playing ground. Textile mills are in huge trouble now due to the two FTAs, which has noted an ‘astronomical’ rise in the quantity of polyester yarn imported from these two countries.
Before the Goods and Services Tax (GST) was implemented, there used to be some protection against the influx of imports under these FTAs as imported yarns were subject to Central Value-Added Tax (CENVAT) at 12 percent and a Special Additional Duty (SAD) of 4 percent, whereas domestic yarn was exempt from CENVAT. Only PSF was subject to CENVAT. This was enough to protect against the zero duty under FTAs. However, post-GST, with the removal of CENVAT and SAD, polyester yarn is being cleared at ZERO duty.
Meanwhile, the garment exporters have also requested the Hon’ble Union Minister of Finance, Nirmala Sitharaman to clear the amount in related to Drawback, RoSL, RoSCTL including IGST stopped to the concerned exporting units listed under Risky Exporters category expediently.
Indian domestic garment manufactures are already worried about the rise of import from Bangladesh as giants like Reliance, Tata and many more have started sourcing from there. Apart from this, famous international retail brands like Zara, Mango and H&M who have established their stores in India and are also sourcing from Bangladesh.
At last, there is some good news for the exporters as several members of the US Congress have backed India’s demand for restoration of the popular Generalised System of Preferences (GSP) scheme for exports to the US market. They have written to the US Trade Representative (USTR) expressing their support for the move and have proposed an ‘Early Harvest’ approach to sort out immediate problems between the two sides.