Imports of fabrics from countries like China is expected to rise further
Confederation of Indian Textile Industry (CITI) is the only National Association that covers the entire spectrum of the Textile and Clothing Industry spanning domestic and exporting unit, including regional and sectoral associations from farms to garments and even textile machinery. Rakesh Mehra, Chairman, CITI, explains the reasons for the increased dumping of Chinese fabrics and discusses how the association and the government are addressing this issue.
China has been dumping synthetic fabrics at relatively cheaper rates in India and also launching cotton like fabrics. How is it affecting the Indian textile industry?
China has been a major supplier of fabric to India and accounts for about 62 per cent of the total fabric import of India from the world. During the last 5 years imports of certain type of fabrics, especially the knitted fabrics have increased significantly. For e.g. imports of HSN 60063200 which is the largest imported fabric commodity form China, have shown a CAGR of 7.7 per cent in value terms and about 22.1 per cent in volume terms during this period. Moreover, its import unit price has also declined by about 40 per cent during this time frame. The present import prices of many of such fabric categories are significantly lower than the domestic viable prices, which is a cause of concern for the domestic industry.
Unable to supply at such prices, many domestic manufacturers are forced to cut down their production due to declined demand of their products.
The imposition of QCOs for MMF fibre and yarn have also affected the availability of raw materials for downstream industry and with QCOs in place, the imports of fabrics is expected to rise further in near future from countries like China, if any preventive measures are not taken timely.
What are the differences in quality and pricing between Chinese fabrics and locally produced fabrics? How do these differences influence consumer choices?
China is a manufacturer of a wide range of fabric including cheap fabric as also high-performance fabrics. The choice of consumer is determined by the market segment it is catering to and their costing priorities.
What measures are being taken by the government to protect the local textile industry from the dumping of Chinese fabrics? Are these measures effective?
Government is extending its full support to the domestic industry to curb rising imports of fabric from China. The matter was raised by CITI and other stakeholders during the meeting of the Textile Advisory Group (TAG) on MMF held on 18 January 2024 and in March 2024, Government imposed a Minimum Imposed Price (MIP) of $ 3.5/Kg on 5 HSN codes of synthetic knitted fabric and this restriction is applicable till 15h September 2024.
Trade analysis shows that after the imposition of the above MSP, cumulative imports of the concerned fabric categories have declined by about 65 per cent during Apr-May 2024 as compared to last year, thus proving to be effective as of now.
However, the industry is concerned that if this restriction continues, the import of such categories may happen under other HSN codes of similar product categories, which at present are not covered under the list of fabrics for which MIP has been announced.
This concern was also discussed in the MMF TAG meeting held recently on 12th July 2024 in Mumbai under the chairmanship of Minister of Textiles during which various stakeholders suggested including such vulnerable HSN codes in the above said with MIP.
Ministry is actively working on the various proposals of the different stakeholders and industry is extremely sure that Government will definitely announce an effective mechanism to restrict such dumping of Chinese fabric into India.
What strategies are local textile manufacturers adopting to compete with the cheaper Chinese fabrics? What do you see as the future of the Indian textile industry in the face of this competition?
One of the major reasons for price difference between Chinese and Indian fabric is the high cost of MMF raw materials in India as compared to China. As of June 2024, prices of PSF and VSF in India was higher was about 38 per cent and 19 per cent respectively as compared to China. Indian domestic industry has been constantly requesting the Government to ensure raw materials availability at the international competitive prices, which is very critical to have a level playing field across the downstream industry.
Apart from this, domestic industry is constantly working towards improving their efficiency and capacity by adopting modernized techniques and improved manufacturing processes. As per the data of ITMF International Textile Machinery Shipment Statistics, during 2023 India has been one of the major investors for rapier-and-projectile looms as also large circular knitting machines.
The industry feels that there is a dire need for Government support to incentivize investment in India’s weaving and processing sector for significant capacity creation as also modernization for improving efficiency. Though the Government has included MMF fabric in under the PLI scheme, however, it will provide benefits only to few large players. As the textile industry is mostly fragmented in nature with majority of the players lying in MSME category, Government may announce ATUFS like scheme as also new version of PLI with lower investment threshold and wider product coverage, which will ensure a holistic development of the sector including the MSMEs.
As it is said that competition is necessary to improve competitiveness, with all the inherited advantage and the continuous support from the Government, Indian textile industry is extremely sure of overtaking China in terms of cost competitiveness and manufacturing efficiency, in years to come.
