For nearly a yr now, India’s main textile hubs of Ludhiana, Surat, and Erode have been preventing an nearly insurmountable problem: rising imports, or arguably large-scale dumping, of man-made fibre (MMF) materials that affects a sector valued at about $60 billion.
Rajesh Bansal, a cloth processor in Ludhiana, took his pals from Nagpur lately to a retail outlet to purchase fleece. “Of the six pieces shown to us, four were from China,” he says.
“China dumps fabric and this creates problems,” asserts Ashok Jirawala, president of the Federation of Gujarat Weavers Association. “We ran our weaving units to full capacity and now we have unsold stocks. So, we plan to cut production by 20%.”
C. Jaganathan, who weaves materials in Erode, imports viscose yarn from China. “When the prices were ₹180 a kg for Indian yarn, I got it for ₹125 a kg from China. Only for the last one month Chinese prices are higher. The Chinese sellers are now offering the current price for a year,” he observes.
In the final three years, MMF material imports, which magnetize largely 20% obligation, have doubled and most of it’s knitted artificial materials, contends R.Okay. Vij, secretary normal of the Polyester Textile Apparel Industry Association.
According to information shared by Mr. Vij, in 2019-2020 (April to March), about 325 tonnes of material had been imported each day from China at $4.61 a kg. The quantity elevated to 887 tonnes a day within the April-June quarter of this fiscal and the common worth was about $2.90 a kg. Of this, worth of knitted or crocheted dyed materials product of artificial fibre was simply $1.4 (about ₹118) a kg.
‘Under invoicing hurts’
It is not only imports, however “under invoicing of imported finished fabrics that is a major issue,” notes Mr. Vij. “The government should issue a notice to Customs, stopping clearance of fabrics that are priced below a certain value at the ports,” he urges.
A employee processing yarn at a sizing unit in Erode district, Tamil Nadu
| Photo Credit:
PERIASAMY M
Rising import of MMF material and comparatively greater home costs of MMF fibres are severely impacting native spinners, knitters, weavers and processors as they’re unable to produce at aggressive costs. This has hit each, the native and export producers, and the downstream trade is claimed to be working at solely 70% capability.
Quick commerce estimates for November from the Confederation of Indian Textile Industry (CITI) present that export of man-made yarn, materials, and made-ups had been 7.33% decrease year-on-year. For April-November, the decline was 23.2%.
In 2017-18, materials dominated India’s whole MMF exports with 33% share, whereas yarn made up 32%, as per a examine on the Ministry of Textiles web site. India’s share in international MMF commerce was 2.7% in 2019.
“Indian textiles is predominantly cotton based,” says a Tamil Nadu-based viscose merchandise producer, who spoke on situation of anonymity. “We could not bring much innovation in MMF products. China, Thailand, Korea have been the innovators,” he provides.
“We were out-priced on the raw material front for the last 15 years. We do small value additions. With the China + 1 strategy, there is a big push from western brands but we do not have the capabilities. China is the biggest player in MMF. It is desperate to sell its raw material at any cost as its customers are looking at other countries for sourcing it. China determines the international prices.”
The viscose merchandise producer says, given China’s dominance, India’s introduction of Quality Control Orders (QCOs) on MMF fibres is severely impacting the complete worth chain.
The authorities has launched QCOs on polyester uncooked supplies, polyester fibre and yarn, and viscose fibre, making Bureau of Indian Standards (BIS) certification obligatory for these merchandise, even when they’re imported.
‘QCOs killing industry’
“The QCOs are killing the industry,” says Rakesh Mehra, Chairman, CITI. “The government should have started with QCOs for garments. That is left open [for imports] and it has introduced QCOs for fibre. This has led to fibre prices going up. What should be of good quality is what touches the skin. But, that [garment and fabrics] is imported without any quality control. One has to do a deep study on the prices and imports. The industry is for QCOs and good quality, But, it should be introduced first at the garment stage,” provides Mr. Mehra.
And, this can be a view echoed by many of the MMF gamers that The Hindu spoke to.
Any textile mill that produces MMF yarn (polyester or viscose) ought to get the yarn examined for BIS requirements. “How can a small-scale mill spend lakhs on testing,” asks a small-scale textile mill proprietor, talking on situation of anonymity. “It should not be mandatory at the yarn stage,” he provides.
By extension, high quality management on fibre imports is denying the market of top of the range materials.
A viscose yarn producer says a garment exporter in Tiruppur confirmed a pattern that he claimed was a branded speciality material. On nearer examination, it turned out to be a mix of nylon and viscose. “No one really checks. The sellers are using brand names to push any type of blended fabric into the market,” provides the yarn producer, who doesn’t want to be recognized.
In a gradual market, the imports and QCOs on fibre appear solely to tug down the trade, not simply the MMF sector however the promising technical textiles section too.
The trade is unable to import MMF fibres underneath advance authorisation scheme for abroad orders the place the purchasers specify the speciality fibres for use. “There is no clarity on this and it is leading to a lot of confusion,” says the Synthetic and Rayon Textiles Export Promotion Council chairman Bhadresh M. Dodhia. “The surge in import of value added products is ridiculously high. QCOs should be implemented across the value chain at the earliest,” he provides.
MSMEs on edge
Almost a yr of declining orders and excessive costs have put MSME models’ funds on edge.
“I weave rayon fabric and sell it to local traders who sell in the north Indian markets,” says Aruchamy, a weaver in Palladam who owns and operates automated looms.
“The buyers have reduced the prices by ₹2 to ₹5 a metre in the last one year. For every three looms, there should be one worker. I now have one person to man five looms. A fitter asks for ₹30,000 a month as salary. I cannot afford it. This affects the quality of the fabric produced,” he provides.
“I used to pay ₹4 lakh a month as electricity charges for the auto looms unit,” says Mr. Jaganathan. “That has increased to ₹6 lakh now. Similarly, labour costs have shot up too. In Erode, auto loom units should pay almost ₹1,000 a day to a worker,” he provides.
He is among the many MMF weavers in Erode who’re demanding reimbursement of GST paid underneath an inverted obligation construction for a yr in order that they get some monetary aid.
When GST was launched in July 2017, MMF fibre and yarn had been levied 18% obligation and material was 5%. From November 1, that yr, the tax on yarn was lowered to 12%. The weavers assumed that they might get a refund for the upper obligation that they’ve been paying. But, two years later, in January 2019, weavers had been informed that the refund would take impact solely from August 1, 2018, a complete yr after they’d paid greater taxes. And that the refund could be on the situation that the weavers didn’t owe any excellent GST for the involved taxation interval of 13 months, failing which, an 18% penalty was levied on the complete 13 months GST worth. As the weavers had been hopeful of getting the refund, they’d not up to date their accounts to mirror the modified taxation and ended up paying the penalty to get their refund.
Mr. Jaganathan contends he ought to get ₹50 lakh as refund for the 13 months.
“There are many weavers who had to shut operations because of the GST issue,” says B. Kandavel, organising secretary of Federation of Tamil Nadu Powerlooms Associations.
Across the nation, the federal government might should pay ₹1,000 crore, or in order refund to the MMF weavers. This can be a big monetary aid to the weavers, provides Mr. Kandavel.
(This is the third of a 4 half weekly sequence taking a look at India’s $150-billion textile sector, and the nation’s second largest employer)
