Government raises import duty on 328 textile products to curb imports

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Government has doubled import duties on 328 textile products to 20% from existing rate of 10% under Section 159 of the Customs Act, 1962.  Earlier in July 2018, Government had doubled import duty on over 50 textile products — including jackets, suits and carpets to 20%.

Significance

The increase in duties will give edge to domestic manufacturers as imported products are currently cheaper. It will curb soaring imports from China and focus more on local value addition in labour-intensive sector. This move will also help to promote ‘Make in India’ as imports of these goods had surged drastically in last one year especially post GST. It will increase in manufacturing activity in various segments of the entire value chain of textile sector, which will help to create jobs in sector, which employs about 10.5 crore people.

Background

The move comes amid mounting concerns that trade war between world’s biggest economies United States and China will further aggravate dumping of cheaper products from China to Indian markets. As such, India’s textile imports jumped by 16% to record $7 billion in last fiscal, with China accounting for over 40% of purchases. Moreover, 28% hike in cotton prices by Government recently to ensure at least 50% premium to farmers over costs is expected to raise basic raw material costs for domestic manufacturers and could hurt our export competitiveness across value chains in the textile and garment sector.

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