Manufacturers of apparel in the country have welcomed the hike in customs duties for several apparel products announced by the Govt. of India. In a Statement Rahul Mehta, President, The Clothing Manufacturers Association of India (CMAI), stated that the Announcement made on 7th August 2018 has doubled the customs duties for a large number of products in the apparel and carpets sectors. Mehta thanked the Hon’ble Minister of Textiles, Smriti Irani for accepting the industry’s recommendations which will bring relief to the domestic apparel industry and encourage domestic manufacturing & boost job creation.
Referring to the hike in customs duties announced for apparel items, Mehta stated that there had been nearly 100 per cent increase in import of apparel products to India during the last five years and the rate of increase has been only getting accelerated in recent months. The increased duties may help in arresting this trend to some extent and saving some jobs in this highly labour intensive industry, he hoped. Having said that, he added, the actual benefits to the domestic industry may be hampered by certain Provisions and Stipulations. He explained that Customs Duties on Imports of most of the apparel products into India apply on a ‘Dual basis’, that is the stipulated Ad Valorem Duty or Specific Duty, whichever is higher, will apply. While increasing the customs duties, Government of India has not increased any of the specific duties.
Mehta stated that nearly 70 per cent of apparel imported into the country comes from Bangladesh and China. Bangladesh has been provided Zero-duty Access by India for all apparel products and, therefore, the increase in customs duties will have no impact on their supplies. China is known for supplying cheap garments and in the case of cheap garments it is the specific duties that will actually apply and not the ad valorem duties. Thus, for the two largest suppliers of apparel to India, the increase in Ad Valorem Rates of Customs Duties may not have much Impact.
Rahul Mehta stated that some of the Specific Duties being applied at present may be at the levels at which India has bound the Duties in WTO, in which case it would be difficult to Increase them. However, implementing the long standing Request of the Industry to stipulate that Duty-free imports of apparel into the country would be subject to the fabrics being produced either in the country of export or in India, is something that can be implemented without any WTO Issues. He added that the zero duty access being provided by India to Bangladesh without any Limits and to Sri Lanka subject to a limit of 8 mn pieces is actually facilitating these countries to import Chinese fabrics, convert them to garments and export to India without customs duties, which is providing duty-free access to Chinese fabrics indirectly. However, notwithstanding the above, CMAI once again compliments and thanks the Government of India and in particular the Hon. Minister of Textiles, Smriti Irani, for taking a bold step in the right direction.