At the recently held meeting of the newly constituted Textile Advisory Group for Man-Made Fibre (MMF) under the Ministry of Textiles, the industry raised the issue of illegal and undervalued import of Chinese knitted fabric. Rising imports (or large-scale dumping) of MMF fabrics from China has been a pain point for India’s $ 60 billion MMF industry for more than a year now. The country’s major textile hubs of Ludhiana, Surat, and Erode have been the most affected by this dumping syndrome. In the last three years, MMF fabric imports (mostly knitted synthetic fabrics), which attract mostly 20 per cent duty, have doubled.
In the calendar year 2022 (CY22), out of global fibre production of 116 million tonne, polyester fibre accounted for a lion’s share of 54 per cent, with the production of 63 million tonne. In the global polyester yarn industry, China, the largest player, is 6-8 times in size than India – the second largest player.
Shutdown in China in 2022 (due to the government’s Zero Covid policy) forced their MMF manufacturers to dump their products in consumer countries like India. This has resulted in manifold increase in imports in India. Import volume from China stood at 887 tonnes of fabric per day (at $2.90 a kg price) in April-June 2023 quarter, compared to about 325 tonnes a day in 2019-20 at $ 4.61 a kg.
Higher domestic prices of M0MF fibres (compared to low-cost imported fabric) have had severe impact on Indian spinners, knitters, weavers and processors as they are unable to supply at competitive prices. According to Confederation of Indian Textile Industry (CITI), in the April-November 2023 period, exports of man-made yarn, fabrics, and made-ups were down 23.2 per cent compared to same period last year.
Similarly, exports of polyester yarn experienced a decline of 38 per cent in FY23 year-on-year basis, while imports surged by 65 per cent. Consequently, Indian polyester yarn industry hit a decade-high level of imports in FY23. As a result, India became a net importer of polyester yarn for the first time in the last decade, which continued during the first 8 months of FY24 as well.
From October 5, 2023, the Government of India introduced Quality Control Orders (QCOs) on polyester raw materials, polyester fibre and yarn, making Bureau of Indian Standards (BIS) certification mandatory for these products, even if they are imported.
QCOs is going to be beneficial for yarn producers. Post BIS implementation, import of polyester yarn witnessed significant decline of nearly 60 per cent in November 2023 as compared to November 2022. But, the same cannot be said about fabric manufacturers, who say that given China’s dominance, introduction of QCOs on MMF fibres is severely impacting the entire value chain. They are of the view that QCOs is distorting the market dynamics and the government should have started with QCOs for garments first (the end-product) instead of fibres (the raw material). Now, they want QCOs to be implemented across the value chain at the earliest.