Union Budget 2018: Garment and Textile Industry of India sinking post flood of imports

The enhancement of duty drawback rates to be effective from January 25, 2018, was announced by the government post repeated calls from various industry groups. The enhancement of rates for 102 tariff items will definitely bring relief to all stakeholders. Also  on the flip side, representatives from the textile industry have noted their “disappointment” with the government for ignoring the calls of an industry which has been “one of the most impacted by GST”.

A decline of 3 per cent in CAGR in textiles and apparels in the month of December last year as against the corresponding period in 2016 has been reported. Exports came to $2996 million during December 2017 when compared to $3075 million in December 2016. Jain echoed the concerns of the industry, “The effective GST duty on fabric is 5 per cent officially, but because of the non-refund of excess input tax credit under inverted duty structure, it actually adds up to 8-9 per cent.

Arvind Sinha , the national president of the Textile Association decries, “Export incentives have come down and at the same time import barriers have gone down which has resulted in imports going up by 20 per cent already, and in some cases like in Bangladesh garments have increased by 50 per cent. Exports are coming down every month.”

This is making us lose to imports because they only pay 5 per cent IGST.” Sinha also shares the same view, “We need genuine duty exemption in exports because money is getting stuck for manufacturers.”