New Delhi, Monday, February 18, 2019: Mr. Sanjay Jain, Chairman, CITI stated that globally the fibre consumption is dominated by manmade fibres having 70% share in total fibre consumption while natural fibres constitute only 30%. Contrary to the global trend, fibre consumption in India is skewed towards natural fibres, especially cotton. He said that the growth of cotton is limited owing to limited agricultural land availability and price volatility. Hence, in order to achieve the desired growth target of US$ 300 billion market by 2025 it has become important for India to focus on manmade textiles along with cotton textiles.

Mr. Rakesh Mehra, Convenor, CITI’s Sub-Committee on Man-Made Fibre & Yarn pointed out that the downstream industries in the MMF textile value chain – spinning and weaving, which is the largest employment generator in the entire value chain are facing acute stress due to high prices of domestic staple fibre relative to what our competitors get in other countries. This affects the export competitiveness of the domestic downstream MMF textile industry and also makes the industry venerable to imports of value added MMF products.

Mr Mehra also pointed out that anti-dumping duties in the beginning of the textile manufacturing chain hurt the down-stream industry. Presently, Anti-dumping Duty on PTA is Rs. 4 to Rs. 6 per kg and on VSF (Viscose Staple Fibre), the Anti-dumping duty is Rs. 12 per kg. India has huge and efficient capacities in the manufacturing of Polyester Staple Fibre and also Viscose Staple Fibre. Moreover, it may be noted that import of Manmade staple fibre in 2017-18 stood at 149 mn. kg which is less than 15% of the total manmade staple fibre consumption in India. Hence, Mr Mehra suggested that the Government may abstain from enhancing Custom Duties and levying Anti-Dumping Duties on Staple Fibres. This will allow the downstream industries along the value chain to grow.

Mr Sanjay K Jain, Chairman CITI expressed his concerns over rising imports of manmade textiles post implementation of GST. As indicated in the table below, in the post GST Regime import of Yarn, Fabrics and Garments has increased substantially.

India’s Imports of Manmade Textiles (In US$ Mn.)

Category	Jul16- Jun 17	Jun17- Jul 18	% change
Fibre	342	359	5%
Filament	600	600	0%
Yarn	149	237	60%
Fabric	1,129	1,262	12%
Apparel	164	212	29%
Home Textile	123	143	16%
Other	142	145	2%
	2,650	2,958	12%

Data Source: CITI Analysis based of DGCI&S data

Mr. Jain pointed out that the inverted duty structure in the case of MMF textiles has lead to GST paid on Capital Goods, Services & certain Inputs being added to cost in the hands of the MMF Textile buyer. These taxes are not considered for calculation of refund of input tax credits. This has made MMF Textiles costlier to the extent of such un-refunded taxes. This will restrict further expansion in MMF textile value chain. The Refund of Input credits due to Inverted Duty is a tedious task and the smaller players are unable to avail it and even those are getting refund are facing liquidity stress. These issues are also responsible for Import of MMF Yarn and Fabric becoming viable and preferred.

Mr. Sanjay Jain said that analysis of  China’s Export of MMF Textiles and Clothing indicate that share of value-added products – Fabric, Apparel and Home Textiles is 85% as against ours 65%. Fibre and Yarn constitute 7% of their total exports whereas the corresponding number in our case is 22%. Thus, it is only logical to conclude that India must concentrate on increasing exports of value-added products along the value chain. Countries like Bangladesh, Cambodia and Vietnam have made substantial gains in their exports of Apparel without really augmenting capacities in manufacturing Fibre and Yarn. The value addition will increase our export numbers and also create jobs which is required to make the Hon’ble Prime Minister’s Make in India programme successful.

Mr Jain also suggested that Government of India must enter into Free Trade Agreements with major markets like the EU, USA, Canada and Britain for the export of MMF garments and fabrics out of India. Such benefits are available to Bangladesh, Vietnam and others. Growth seen in these countries is a result of such bilateral agreements. These countries do not even have Fibre manufacturing and have concentrated on the downstream industries alone.

Further, for the upliftment of the MMF sector, Chairman CITI requested the Government to reduce GST on MMF from 18% to 12% and GST on MMF raw material viz. PTA and MEG from 18% to 12%. Also, anti-dumping duty on PTA in the recently initiated sunset review may be discontinued. He also requested the Government to increase the import duty on MMF based spun yarn and Fabrics as huge surge of imports have been seen in this category post GST which is impacting spun yarn and fabric manufacturers in a big way.