The Clothing Manufacturers Association of India (CMAI), representing the interests of close to 4,000 members and servicing over 20,000 retailers, has written to the Minister of Textiles Smriti Zubin Irani, and the Minister of Commerce and Industry Piyush Goyal, and has submitted a representation to the Government to consider levying a temporary additional COVID Duty on all imports of apparel and readymade garments, including on those garments imported from countries with whom India has a Free Trade Agreement, especially Bangladesh.
CMAI has for long been drawing the Government’s attention to the dangers posed by the duty-free imports of garments from Bangladesh, and with it the back-door entry of Chinese fabrics into India – and its consequent impact on the MSME dominated domestic garment industry.
The significant rate of growth of these imports are well documented, and needs no repetition, except to state that the surge continues unabated, as the following table would highlight:
The Government has in several of CMAI’s discussions and interactions pointed out to the various treaties signed with Bangladesh and other SAFTA countries, and that it would be difficult, if not impossible, to dilute the agreements.
However, CMAI has urged the Government to consider the dramatically changed circumstances prevailing today, in the aftermath of the COVID 19 disaster.
The Indian textile industry has been hit hard by COVID-19 that has impacted exports as well as sales of apparel products in the domestic market. Based on a recent study done by CMAI, it is estimated that will be more than 40 percent drop in domestic demand of apparel due to the lockdown and the reduced demand as a result of COVID-19. It is also estimated that more than 20 percent of the domestic units may face closure, being unable to survive the current crisis. The reduction in demand and revenue levels will lead to downsizing of operations, closure of units and job losses in Indian textile and apparel industry to the tune of 1 crore across the entire textile value chain.
In this crisis situation, it is important to think of innovative ideas and policies to support the industry to survive in the immediate term.
With this in view, CMAI has urged the Textiles Ministry to levy such an import duty on imports of garments and fabrics from all countries, including those with whom India has FTAs or Zero Duty Agreements.
Such an additional duty will result in a level playing field for the domestic manufacturers, and help them compete with the Bangladesh garment industry, which has currently at least 15 percent cheaper production cost.
This will have great positive impact on the Domestic Industry and will result in the quick recovery of hundreds of MSMEs who are today on the verge of collapse, and the possible savings of hundreds of thousands of jobs. Additionally this will enable the Government to collect approximately US$ 100-150 million for its fight against COVID-19 (depending on the quantum of duty imposed).
Being fully cognisant of the Government’s constraints, CMAI has suggested that such a measure may be undertaken only for a limited period of time of 12 months, after which they can go back to their current agreements in force.