Chennai: Import of viscose yarn has shot up close to 200 per cent since May as China and Indonesia are dumping cheaper yarn into the Indian market. The industry is in a catch-22 situation while demanding increase in duties to check heightened imports, as it would work against the competitiveness in the downstream segments.
Between May and September this year, the country has imported 14,510,000 kg of viscose yarn, 195 per cent higher than 4,920,000 kg imported in the same period last year. Since May, imports have been drastically going up, with July witnessing a 342 per cent growth in imports and August seeing an 816 per cent rise.
‘Since the US-China trade war started slowing down the demand for viscose yarn globally, India has been increasingly witnessing dumping of viscose yarn. China and Indonesia have been dumping cheaper yarn into the country, thus ,affecting the spinning industry severely,” said Sanjay Jain, former chairman of the Confederation of Indian Textile Industry (CITI)
According to Rakesh Mehra, Convenor, CITI’s Sub-Committee on Man-Made Fibre & Yarn, the inverted duty structure in viscose yarn and fibre also has led to the situation. “For viscose fibre, India levies import duty as well as anti-dumping duty, which leads to a total tax incidence of around 20 per cent, whereas yarn attracts only 5.5 per cent import duty. This makes importing yarn cheaper than getting domestically produced costlier fibre,” he said.
India is self-sufficient in yarn and it does not need imports. “While most of the spinning mills are running on lower capacity, some smaller mills in south India are facing a tough time,” he said. Availability of cheaper viscose yarn will also affect cotton yarn demand as fabric-makers will use more viscose than cotton in their products.
The industry has requested the government to levy anti-dumping duty on yarn as well. “We want the total tax incidence to be 15 per cent or at least 10 per cent on yarn to deter increasing imports,” said Jain.
But this has put the industry in a difficult situation. If the yarn duties are increased, either fabric imports will go up or the entire value chain will become costlier, affecting the competitiveness of Indian products in the global market. But if the duties remain the same, imports will continue to impact the domestic spinning industry.
“Ideally, there should not be anti-dumping duty in any segment to keep the prices under check down the value chain,” said Mehra....