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Cover Story | May 2015

Fabrics Flood India | China´s dumping accounts for 80%

Cheap imports of man-made fabrics into the country have upset the calculations of the domestic industry, casting doubts over achieving the country´s ambitious textile targets, unravels Samuel Joseph.
Woes for the man-made fibre (MMF) industry have been piling up, with the proverbial last straw being the dumping of cheap fabrics in the last one year amounting to $850 million by countries including three major Asian nations ´ China, Taiwan and Korea. During 2013-14, import of fabric from China increased 79.49 per cent in terms of quantity followed by 4.15 per cent and 0.89 per cent from Taiwan and Korea respectively. The total import of fabric from these countries accounted for 84.56 per cent (see Table 1). China has taken advantage of the subsidy of 29 per cent given for exports of this item by the Chinese government to dump huge quantities of fabrics.

Misfortunes come not in singles, but in battalions, feels the MMF industry. Firstly, the global ratio of cotton versus synthetics is 30:70, but in India it is almost the reverse with about 60:40. The perpetual grouse of the MMF industry that cotton enjoys 0 per cent excise against 12 per cent for synthetics seems to have fallen on the deaf ears of the government. The Federation of Indian Art Silk Weaving Industry (FIASWI) is already worried over the dwindling demand of MMFs manufactured in Surat, Maharashtra and other parts of the country due to the huge increase in import of cheap MMF fabric from China, Taiwan and South Korea. FIASWI has already demanded a hike in import duty on fabric from 10-30 per cent to discourage Chinese manufacturers.

The synthetic textile industry opines that the apparel manufacturers have taken undue advantages of the various loopholes to import cheap fabrics into the country while adequate capacity for quality fabrics exists within the country.

Anil Rajvanshi, Senior Executive VP, Reliance Industries (Petrochemicals), who is also Chairman of Synthetic Rayon and Textile Export Promotion Council (SRTEPC), refers to various discussions that industry and stakeholders had in the past on the demand of apparel exporters allowing them duty free scrip of 2 per cent of their exports to import fabric.

He says: ´At every meeting it was opposed by domestic fabric producers and the motive was challenged on merit. At every occasion, the Apparel Export Promotion Council (AEPC) has miserably failed to convince their motive of seeking this concession despite a facility of advance license available to exporters for duty-free import of inputs.? He adds: ´Knowing fully well that 30 per cent of weaving capacity at Gujarat, which mainly weaves MMF fabrics has since shut down. The Ministry of Textiles is well aware of the plight of MMF fabric producers and the challenges faced by them due to increased imports of fabrics from China. In 2014-15, fabric worth $850 million has been imported into India.´

Says Rajvanshi further: ´n 2012-13, Shaktivel, AEPC Chairman when first raised this point, he was asked by then Textile Minister to meet fabrics producers of MMF under SRTEPC. He directed Joint Secretary Monica Garg to fix the meeting and accordingly a meeting was fixed at Mumbai where hundreds of MMF fabric producing members gathered to meet AEPC delegation. Garg arrived from Delhi but AEPC delegation backed out and did not turn up for the reasons best known to them.´

He digs deeper into his complaint: ´Thereafter, AEPC was directed to give sample of fabrics that they want. AEPC again failed to do that and haven´t done so far. In our meeting with Commerce Secretary and DGFT, both impressed upon the fact that advance licenses are issued on line in flat 8 minutes and the whole procedure is simplified. One fail to understand as to why apparel exporters can´t avail of standard practice... There game is different. They are trying to circumven

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