Chennai: The trade war between India and China has opened up a big opportunity for Indian man-made textile industry to help stagnant exports to grow by double-digits. However, the government will have to be proactive to help the industry grab this opportunity.
Man-made textile is one among the products from China upon which Trump administration has levied additional tariff recently. Though the new tariffs were supposed to be levied from September, the US has postponed them to December. In the next few months, the industry can prepare itself to grab this opportunity.
“The trade war has opened up an opportunity, which will help our stagnant exports grow by 10 to 12 per cent in one-and-half years if some of the issues faced by the industry are taken care of,” said Ronak Rughani , Chairman of Synthetic & Rayon Textiles Export Promotion Council.
Indian MMF exports have been stagnating for the past four years. At $6 billion, the exports had grown by a marginal 1.9 per cent in FY19.
On the other hand, China exports $7 billion worth man-made textiles to the US. Even if India manages to grab a portion of these exports and manage to grow by 10 per cent, the $6 billion man-made textile exports will move up to $6.6 billion.
However, in order to grab this opportunity, the industry needs support of the government.
“Chinese government heavily subsidises the industry and circumvents some of the WTO norms which makes their products competitive in the international market. Countries like Vietnam and Bangladesh have signed free trade agreements and preferential trade agreements with some of the key markets like the US and the Europe. Indian industry does not enjoy these benefits,’ said Rughani.
Inverted duty structure for the imports of raw materials and finished products is one of the main factors that impede the production and exports of man-made textiles. While the raw materials attract GST of around 18 per cent, finished products attract only 5 per cent. Duty-free import of apparels from Bangladesh has been rising in the recent months.