Govt may hike import duty on textile products

The Centre may double the import duty to 20% on over 500 textile products, including fabric, garments and man-made fibres, from Tuesday.

Officials said the Ministry of Finance on Monday accepted the recommendation of the Ministry of Textiles to increase import duty on over 500 textile products. The duty hike is also aimed at countering import from China.

The new rate will come into effect after the government tables a notification in Parliament on Tuesday. The move is expected to give a leg up to the domestic manufacturing sector and create jobs which at present gives employment to over 10 crore people.

Last month, the government had increased import duty on 50 textile products.

India imposes anti-dumping duty on basic raw materials to the extent of 50% per kg on some raw products but has no such protection for products like fabrics and garments which are made out of these raw materials. Taking advantage of this, most other countries convert the raw material into a fabric and sell it in India.

The increase in import duty on textile is also expected to correct a GST anomaly where total import duty has come down to 18% on all fabrics and garments.

The textile industry has long been demanding an increase in import duty on man-made fibre, garments and cotton fabrics as well as protection to the local yarn, fabric and garment producers from the cheap import threats, especially from free trade agreement (FTA) nations such as Bangladesh and Sri Lanka.

Man-made fibre price in India costs 20% to 30% more due to the high incidence of duties and levies. This gives rise to cheaper imports from neighbours such as China.