New Delhi, Sunday, 13th September 2020 : The Ministry of Textiles has set a target of US$ 350 billion
market size for the growth of the Indian Textiles & Clothing (T&C) Industry by 2025. However, the same cannot be achieved until and unless we show progress in exports of textile products, especially in the Man Made Fibre (MMF) Sector. The industry has been
facing stagnation since many years mainly due to the lack of availability of the basic raw materials of man-made fibre / filament yarn at internationally competitive prices. Taking a serious view of the high price of VSF in India, the captains of the various
segments of VSF value chain, viz Apparel Export Promotion Council (AEPC), Bhiwandi Powerloom Weavers Federation Ltd. (BPWF), Confederation of Indian Textile Industry (CITI), The Clothing Manufacturers Association of India (CMAI), Federation of Gujarat Weavers’
Welfare Association (FGWWA), Handloom Export Promotion Council (HEPC), Indian Spinners Association (ISA), Ichalkaranji Shuttleless Looms Owners Association (ISLOA), Powerloom Development Export Promotion Council (PDEXCIL) and Tamil Nadu Federation of Powerloom
Associations (TNFPA) have submitted a joint representation to the Hon’ble Prime Minister of India for the removal of Anti-Dumping Duty on Import of Viscose Staple Fibre (VSF) to achieve global competitiveness. They have also pleaded to the Hon’ble Union Ministers
of Finance, Commerce and Textiles and their respective Secretaries in this regard.
The textile industry players have stated that cotton fibre which is the basic raw material for the cotton textile industry and also the growth engine of the Indian T&C industry is available to the industry at an internationally competitive prices. This has helped the entire cotton value chain to remain globally competitive as it doesn’t attract any import duty or anti-dumping duty.
VSF Value Chain stakeholders pointed out that India despite being the second largest producer of MMF in the world, its share in total T&C exports accounts for only 20%. While, China’s share of MMF products stands at 80% which is far bigger than India in comparison. The Indian Textile industry is not in a position to fully capture the market opportunities when compared to Vietnam, Indonesia, Thailand, Bangladesh, Pakistan, etc., mainly due to the expensive VSF price which is the second most important basic raw material for the MMF textile value chain. During the last four years, the imports of VSF spun yarn have increased by 27 times that has greatly affected the highly capital and labour intensive spinning sector including the latest investments in airvortex technology.
The Industry players stated that the Government of India has immensely helped the MMF Sector by removing anti-dumping duty on PTA, which is a major raw material for polyester staple fibre and by rejecting the proposal of ADD on PSF and MEG and thereby creating a level playing field in the polyester segment. Viscose Staple Fibre (VSF) (HSN Code: 55041000) is still being given undue protection by way of anti-dumping duty which also seriously affects the entire viscose staple fibre textile value chain. They said VSF attracts ADD of 0.103 USD to 0.512 USD per kg for the imports even from countries like Indonesia.
The industry players pointed that the anti-dumping duty on viscose staple fibre has been in existence for the past 10 years and VSF is produced by a single manufacturer in the country and they monopolize their pricing policy.
The MSME spinners don’t have strength to negotiate prices with supplier and this has led to the decline of powerloom fabric exports and made the sector uncompetitive in the international market. However, in the case of polyester staple fibre, there are several producers in India and spinners get competitive prices unlike VSF.
The VSF Value Chain industry players stated that keeping in mind the growing demand for Viscose fibre in India, the current domestic capacity is not enough and hence the domestic producer is adopting import parity pricing while selling the fibre to domestic spinners at a premium of Rs.20/Kg taking advantage of ADD. While the same fibre is being exported to our competing countries at an international prices.
The industry players pointed out that the Competition Commission of India in its order dated 16th March 2020, case No.62/2016 levied Grasim Industries Limited a penalty of Rs.301.61 crores for abuse of dominant position in the market for supply of Viscose Staple Fibre (VSF) to spinners in India and Grasim was found to be charging discriminatory prices to its customers, besides being found to be imposing supplementary obligations upon them.
The industry players stated that the domestic fibre manufacturer adopts a highly complicated domestic pricing policy.
They promise discounts to the tune of 40% while withholding over 1/3rd of it till the year end leading to the blockage of the working capital. They link the discount to the incremental fibre consumption with a one-sided penalty clause and prevent sourcing from other suppliers with an annual contract.
The industry players stated that the powerloom imported Viscose Spun Yarn of 2,022 tons during 2016-17 and the same increased to 56,262 tons (over 27 times increase) during 2019-20. This has led to opportunity loss during 2019-20 due to Viscose Spun Yarn import estimated at four lakh spindles production capacity worth around Rs.1,000 crores and 8,000 jobs in spinning and also a forex outflow of USD 129.15 million.
The VSF Value Chain stakeholders stated that the Government is encouraging Make in India and Scale of Production by extending MEIS, RoSL and RoSTL schemes to the garment and made-ups segments, while the differential pricing policy followed by the indigenous VSF manufacturer makes us lose our competitive edge to other Nations who grab the lion’s share of the export markets for these products. VSF producers in countries like Indonesia supply VSF either at the same price or slightly lower price to encourage value addition, job creation and forex earnings which is not there in the case of Indian VSF manufacturer.
The industry players stated that the entire globe follows the VSF price based on wood pulp prices which has been on the declining trend globally, however, the indigenous manufacturer always keeps the price much higher than the international price taking advantage of the anti-dumping provision. Even though the domestic producer is planning to add new capacities, they will continue to monopolize the domestic value chain unless ADD on viscose fibre is removed.
The VSF Value Chain industry players concluded by saying that removing ADD on VSF will make the domestic VSF prices aligned with Global VSF Prices making the entire Indian VSF textile value chain globally competitive and boost production and exports of these products.
