Recently, the government of India removed the anti-dumping duty (ADD) on Viscose Staple Fibre (VSF). The ADD on VSF (up to $0.512 per kg) was enforced by the finance ministry in August 2016, for a period of five years and was a whopping $162 per MT before. Cross section of the industry were asked to share views on whether this move will boost the MMF sector.

The government of India has been formulating several measures to maximise and expedite India’s role and progress in the global manufacturing and services supply chain. “We want India to create world-class products that are globally competitive," declared Prime Minister Narendra Modi at the recently-held 'Local Goes Global – Make in India for the World' virtual meet with various stakeholders from the trade & commerce sector.

“At present, our exports comprise about 20 per cent of the Gross Domestic Product (GDP). Considering the size of our economy and the base of our manufacturing and service industry, the sector has the potential to grow a lot," he expressed confidence.

In this regard, a recent decision by the government has instilled confidence among textile manufacturers in the country. The Union government has decided to eradicate the Anti-Dumping Duty (ADD) on Viscose Staple Fibre (VSF), a man-made cellulosic fibre that is biodegradable. Extracted and synthesised from wood pulp and cotton pulp, VSF is a versatile and easily bendable fibre used in apparel, home textiles, home furnishings, dress materials, woven and knitwear. The anti-dumping duty on VSF (up to $0.512 per kg) was enforced by the finance ministry in August 2016, for a period of five years.

‘Negate ADD, promote growth’

The smorgasbord of ADD on Man-Made Fibres/Filaments (MMF) has been an Achilles’ heel to the Indian textile industry for long. It included levies on Purified Terephthalic Acid (PTA), Acrylic fibre (AF) and VSF. Early last year, the Indian government offered some respite to Indian garment manufacturers by abolishing the ADD levied on imports of PTA – a crucial raw material that goes into polyester fabrics. The ADD on AF imported from Thailand was also removed subsequently, followed by a recommendation for zero duty on Dralon from the European Union. This proved to be a much-needed relief for the domestic textile industry, as the previous duty charged was a whopping $162 per MT.

It’s pertinent to note that numerous textile industry bodies, such as the AEPC, the National Committee on Textiles and Clothing, the Confederation of Indian Textile Industry (CITI), the Clothing Manufacturers Association of India (CMAI), the Indian Spinners’ Association and the Powerloom Development Export Promotion Council, had submitted a joint representation to the Prime Minister this January. The representation sought the removal of the anti-dumping duties on VSF, redressal of VSF spun yarn availability and price issues to prevent job losses across the VSF textile value chain.

Vital boost to MMF segment

Several industry stalwarts are of the view that the Directorate General of Trade Remedies (DGTR) nudging the government to scrap the ADD on VSF will help boost the MMF segment in the country as well as push exports of apparel. “The removal of protectionist tariffs on VSF will align domestic VSF prices with global prices, making the entire Indian VSF textile value chain globally competitive. It will boost production and exports,” A Sakthivel, chairman, Apparel Export Promotion Council (AEPC) had welcomed the government move recently.

For better context, MMF surpassed cotton as the dominant fibre since the mid-1990s, when it overtook cotton volumes and has continued to grow faster thereafter as compared to all other fibres. “In 2018, the global fibre production was 110 million tonnes, in which the share of MMF is around 72 per cent – of which synthetic filament is around 50 million tonnes (45 per cent), synthetic staple is 22 million tonnes (20 per cent), cellulosic fibre 7 million tonnes (7 per cent) of the global fibre production in 2018. The domestic fibre consumption ratio in India at present is 40:60 between man-made fibres and natural fibres, which is almost opposite to the global fibre consumption trends," according to the AEPC.

The AEPC is also willing to focus on research & development regarding the production of MMF fabrics matching international standards and has requested the government to provide it an aid of ?25 crore. “The (recent) decision will help the MMF segment, which both the industry and government have identified as the sunrise sector, for increasing the share of India in global apparel trade. With quality fabric at the right price in place, it will finally give wings to the proposed Production Linked Incentive (PLI) scheme for the MMF segment,” Sakthivel had remarked.

The scrapping of anti-dumping duty is a welcome move, and it is definitely an effort towards uplifting the sector as a whole, asserts Naresh Jain of Siddhachal Textile, adding, "However, with the pandemic scenario, freight charges have increased in both India and China. Thus, the industry feels this would not make a big difference for the domestic market and also will not have any big impact on local VSF yarn prices. We, however, need to wait and keep an eye on the fluctuating yarn prices to arrive at a conclusion."

He further states that we can't afford to be short-sighted with any reforms, as every positive move will transform and take the textile sector to become one of the most promising sectors in this country.

Restoring parity

An industry veteran, Rahul Mehta, president and trustee of the CMAI, quips that it was surprising that the Indian government had been allowing – and even encouraging – the import of duty-free finished garments from Bangladesh, even as it levied duty on raw materials used in the Indian textile industry. "The government has taken the right decision to promote the MMF segment under its PLI Scheme. We have been in favour of no import duties and anti-dumping duties on raw materials, as they make our garments' production more expensive.” CMAI is one of the oldest and most inclusive textile associations in the country.

Tiruppur Exporters’ Association (TEA) president, Raja M Shanmugham echoes a similar view, adding that the government has restored parity in prices when compared to the other international textile markets like Bangladesh, with this move. “This is a much expected step by our government, which should help us achieve price equality in the international markets. Until quite recently, only a few monopolies were playing a dominant role in India owing to the price disparity. But the removal of ADD will help the trade to grow in the export as well as domestic segments.”