The government’s announcement of hike in customs duties for some apparel products has been welcomed by Indian manufacturers of apparels.
The announcement made on 7th August 2018, which states that the customs duties for a large number of apparels and carpets products has doubled, said Mr Rahul Mehta, President, The Clothing Manufacturers Association of India (CMAI). The Hon’ble Minister of Textiles, Smt Smriti Irani was thanked by Mr Mehta, for accepting the industry’s recommendations, which would bring relief to the domestic apparel industry, encourage domestic manufacturing and boost job creation as well.
The government recently hiked the customs duties on 328 textile products to 20 per cent in a move to promote domestic manufacturing under the Make in India initiative. Hence, imported innerwear, pyjamas, track suits, baby garments, and swimwear would now cost more. Basic customs duties have also been increased on woollens, shawls carpets, textile floorings, dressing gowns, druggets, ensemble of silk and artificial fibre.
A notification was tabled by Minister of State for Finance, Pon Radhakrishnan in the Lok Sabha regarding the list of textile products on which the duties would be hiked. The Central Board of indirect Taxes and Custom (CBIC) notified about the list.
Besides boosting the domestic apparels manufacturing, this move will also help create jobs in this segment that has around 10.5 crore employees currently. After agriculture, India’s textile industry is the second largest job provider. Besides, the industry has around 15 per cent of the country’s exports totally, which makes it the second largest exporter in the world, after China.
No doubt the ‘Make in India’ initiative will get a boost with this move according to the textiles industry as imports of these products has increased greatly in one year post GST.
The government’s move also seeks to protect Indian manufacturers from suffering due to a bitter Sino-US trade war. Recently, India quietly raised import duty on over 50 textile products; however, this move is much greater than that. Also, India’s apprehension is quite genuine as it fears that blocked by Americans, China may usurp India’s market with cheap products, which would in turn destroy the country’s domestic market.
However, Sri Lanka, Bangladesh and Vietnam, who have quite favourable trade treaties with India, which includes Free Trade Agreements (FTAs) and benefits from other pacts are making it tough for India. Moreover, China was evading duties and was indirectly exporting its products through Vietnam, Sri Lanka and Bangladesh by upgrading its products a little. Now, the tariff wall will compel it to use this escape route to get access to the market. The government needs to look into this and also should take steps to make the country’s textile industry competitive.
Now, Mr Mehta stated that there had been almost 100 per cent rise in imports of apparel products to the country and this has only been growing. So, the rise in duties is likely to halt this situation partially while also saving jobs in the sector. However, he said that certain provisions and stipulations may hamper the actual benefits to the domestic sector. The customs duties on imports of most apparel products into the country are applied on a ‘Dual Basis’, which is the stipulated Ad Valorem Duty or Specific Duty, depending on whichever is higher, said Mr Mehta. The government has not hiked any specific duties while hiking the customs duties.
There are many such elements, yet the CMAI is appreciative about the government’s move for taking the step of hiking the customs duties on a number of apparel products.