Sub: Roundtable on augmenting competitiveness of the Textile and Apparel Sector by addressing Inverted Duty Structure on 19th March 2024, 3:00 PM – 4:30 PM– reg.

Dear Sir/Madam,

As members are aware the Inverted Duty Structure (IDS) is a situation where duties levied on finished products are less than the duties levied on inputs used to produce the same final product. This raises the cost of production and also decreases the competitiveness of products. Furthermore, IDS makes imports of final products cheaper while it makes imports of inputs costlier, and thus IDS incentivizes the firms to directly import the final products rather than importing inputs and then manufacturing them domestically.

Given the relevance of the IDS on the competitiveness of the Indian Textile Industry, CITI had been taking up this issue with Ministry of Textiles and NITI Aayog on regular basis. CITI had identified various areas where there is a significant impact of IDC on textile products. The detailed note is attached as Annex 1 for the kind perusal of the members.

It is to bring to the notice of members that CUTS Institute of Regulation & Competition (CIRC) and CUTS International are carrying out a policy research project called “Impact of Inverted Duty Structure on Level Playing Field for Domestic Producers in India” to assess the products/sectors being affected by the incidence of “Inverted Duty Structure” (IDS).

The project seeks to achieve the following objectives:

• Study the impact of India’s Free Trade Agreements that are leading to inverted duty structures as well the cesses and tariffs outside the GST system
• Finding the actual products at the HS 6-digit level that are affected by the incidence of IDS in select sectors
• Assess the impact of such an inverted duty structure on the cost competitiveness of the domestic producers and suggest specific measures to remedy such situations
• Communicate such findings to the relevant policymakers and propose solutions for policy advocacy on how to deal with such an inverted duty structure and the cost of taxes.

 

CITI has been collaborating on this study with the aim of developing a good advocacy document for correcting the inverted duties in the textile & apparel sector.

To share the findings of CUTS and CIRC and get the industry feedback on the same, it is proposed to hold a round table on 19^th March in CITI Delhi Office at 3:00 PM to 4:30 PM. In case you cannot attend the meeting physically and would like to join the meeting virtually, please confirm your participation for the same. Joining link for virtual meeting will be shared upon receiving the confirmation.

Summary of the results of the study of CUTS along with the list of all textile products impacted by the IDS and the list of shortlisted textile products affected by the IDS are also attached for the kind perusal of the members.

Members are kindly requested to share their feedback/suggestions on the same and also confirm their availability at the earliest.

Thanking you,

Yours faithfully,

Chandrima Chatterjee

Secretary General