Level Playing Field for Competitiveness of the Indian Spinning Industry

The Northern India Textile Mills’ Association, popularly known as NITMA is an apex association of North India serving the interest of textile units. All the large textile mills in the Northern part of India are associated with NITMA and the combined turnover of its members is approx. 50,000 crores (USD 8 Billion). It was formed in
1958 and represents industry for all policy matters and disseminates information apart from conducting conferences, exhibitions, seminars & workshops.

A joint delegation led by Sh. Madan Mohan Vyas President, Ludhiana Spinners Association (LSA) and Sh. Sanjay Garg President, Northern India Textile Mills Association (NITMA) had a fruitful meeting with Shri. Piyush Goyal,Union Minister of Commerce and Industry and Shri Som Parkash Gupta, Minister of State, Commerce and Industry on March 2nd at New Delhi.

The other members of the delegation include Sh. Rishab Oswal, E D, Oswal Woollen Mills (OWM), Dr Ravinder Verma, Ganga Acrowools Ltd. Sh. Sidharth Khanna,Director, Arisudana Industries Ltd. Sh. Pawan Sharma, Director, OWM, Sh. Vinod Kumar Banda, Partner Shiv Woollen Mills and Sh. Anil Kumar Vasupillai, SG, NITMA. During the meeting Sh. M M Vyas submitted representations requesting for a level playing field from various association of Ludhiana which include Knitwear & Apparel Manufacturers Association of Ludhiana, Hosiery & Garments Traders Association Ludhiana, Shwal Club ( India), Knitwear Club, Knitwear & Textiles Club, Fancy Yarn Traders Association, Bahadur-ke Textile & Knitwear Association, Ludhiana Woollen Manufacturers Association apart from Ludhiana Spinners Association and Northern India Textile Mills Association (NITMA).

1. A level playing field for Indian Manmade fibre Industry by abolishing Anti dumping duty (ADD) on Acrylic Fibre (AF) for enhancing Competitiveness in the value chain. It was highlighted that the competitiveness of the Indian Acrylic Textiles particularly its downstream value added segments a majority of which are in the unorganized sector have been affected due to the continued imposition of antidumping duty (ADD) on its primary raw material, that is Acrylic Fibre (AF) for the last 23 years from one source or other. The delegation briefed that Acrylic fibre is a good replacement for wool and hence sometimes called poor man’s wool, with main end use in sweaters, shawls and hand knitting yarns, engaging millions across the Country. They are raised their concern with regard to the presently ongoing two anti dumping investigations in the DGTR on Acrylic Fibre against petitions filed by domestic industry to impose the duty, one concerning imports of AF from Thailand and another one on imports of AF from Belarus, Ukraine EU and Peru.

It was mentioned that the organized Indian Acrylic Fibre producer’s employs 3,500 persons across their 3 plants, and about 60 semi-organized Acrylic yarn producers employ about 35,000 persons. While large number of units in the Acrylic value chain is in the downstream value added segment, mostly unorganized, which make sweater,shawl and other value added products and consists of about 7,500 units that together employ about 10 lakhs people? A large number these MSME segments have been suffering for long period for their survival as their survival have been severely affected by the anti-dumping duties (ADD) on its basic raw material.

It was highlighted that the continued imposition of Anti dumping duties have led to higher yarn prices in India as compared to other Asian Countries. The high cost yarn has made our downstream value added Industries uncompetitive leading to a grave situation that now we are unable to compete not only in the exports market but even our domestic market have been suffering due large scale imports of sweaters into India by competing countries, loosing many employment opportunities and livelihoods of millions in many regions in the Country. Sweater manufacturing is an important segment of Manmade fibre Industry, and in world sweater market India’s share was a negligible 0.07 billion USD as compare that 10.3 billion USD of China and 2.5 billion USD of Bangladesh as per the 2018 data. This is in spite of we are having all ingredients to compete in the global market, viz. the technical know-how, infrastructure for production and access to markets. But the main reason being uncompetitive in this growing segment is due to high raw material prices.

Shri Piyush Goyal after interacting with the delegation said that the issue is of importance and will be looked into for a solution. He said that for this reports from the Textile Ministry will be sought to gather the parent Ministry’s view. He also said that the Directorate General of Trade Remedies (DGTR) will also initiate meetings
as per its procedure with the stakeholders in this matter and a decision will be arrived at purely on merit basis by examining all facts and the situation. He said making available raw material at competitive prices is vital for enhancing competitiveness of the industry, which is vital for growth.

2.A Level playing field for Indian Spinning Mills by removing the anomaly in the ASEAN FTA agreements with Indonesia & Vietnam under which 100% Polyester Spun yarn is being imported @ zero duty into the country, leading to closure of medium & small scale Textile spinning mills.

The delegation highlighted that currently, the textile spinning mills are in huge trouble due to free trade agreements (FTA’s) with Indonesia & Vietnam as the finished product of the mills, that is, polyester yarn – 55092100 is included in the list of items being cleared with ASEAN certificate @ zero duty. Whereas the raw material, that is, polyester staple fiber (PSF) – 55032000 is not included in this list & hence cleared at full duty rate of 5.5% as a result of which domestic mills do not have a level playing field as compared to the Indonesian spinning mills.

It was mentioned that post GST, polyester yarn is being cleared @ zero duty with the removal of CENVAT @ 12 % & SAD @ 4 %. These duties were a sort of protection against imports of yarn in the pre-GST regime against the clearance @ zero duty under FTA’s. Presently with nil duty there has been a surge in imports of the spun yarn, especially in the post GST, more so quantity that was being imported annually (FY16-17- i.e. 6944 tons) is now being imported on monthly basis which reflects an 1100% increase in imports. This is creating a stress and could severely affect the very survival of the spinning units.

It was mentioned that yarn manufacturing requires 50 times more workers than manufacturing the same amount of fiber. Currently, due to this anomaly, the industry that is more labour intensive is at a disadvantage. If left unchecked, this figure, on account of the huge size of the spinning mills in Indonesia, will surely increase even further thereby threatening the survival of this labor intensive industry.

The delegation has suggested that to protect the domestic industry from closure & further job cuts there is an urgent need to exclude Polyester Yarn from the list of items is being cleared @ zero duty under ASEAN or alternatively, urgent inclusion of PSF to the list of items being cleared @ zero duty under ASEAN. The delegation has requested the Union Minister to champion their cause and save the spinning industry by excluding Polyester Spun Yarn from the list of items being cleared @ zero duty while the Ministry is undertaking the review of the ASEAN FTA with Indonesia & Vietnam, in the near future, as it will give a level playing field to the Indian spinning industry.

It also suggested as a non-tariff measure initiatives may be taken for imposition of BIS quality standard IS 17265 2019 on imports of PSY- HS code 55092100. This could help boost the high quality local manufacturing, as the domestic producers also need to follow this qality standard if it is making mandatory for the importing countries.

This measure to an extent help regulate the quality of PSY coming into the country which is especially important because of the presence of heavy metal compounds like Antimony, Lead, Cadmium etc. in the polyester yarn which are released into the Indian water bodies when fabrics made of these yarns are dyed. The industry expressed their apprehension regarding the ability of small scale units to follow the standard. The delegation said that as a final resort it had taken steps to file application with DGTR for imposing antidumping duty to protect against surge Polyester yarn. It was mentioned that for this to be undertaken successfully urgently support from the Commerce Ministry is very important.

Shri Piyush Goyal said that it may be difficult to ensure exclusion of certain tariff lines while undertaking review of the ASEAN FTA, which may also take more time. He has suggested that taking initiative for anti-dumping duty to arrest large imports is the most appropriate resort & directed the officials in the Commerce Ministry & also
the DGFT to speed up the process & take decisions purely on merit basis so that spinning mills are saved from closure. He also asked to obtain report from the Textile Ministry. He said that providing level playing field for the manufacturing industry is important for growth. He said he is of the opinion of imposing quality standards for
stopping huge low quality imports of products into India. He suggested that NITMA need to take initiatives to encourage small units to adhere to high quality production. He said if we take the path of producing quality products, in the long run it will be beneficial for units and also for the country as it helps improve our export share in the global market.

All the members of delegation expressed their heartfelt gratitude to Shri Piyush Goyal for sparing his valuable time & for guiding us in the right direction. They also thanked the ministry for the unprecedented step of removal of Anti-dumping duty on PTA, which is a basic raw material for a huge portion of the textile industry.

Before meeting the Union Minister, the delegation had a brief meeting with Sh. Som Parkash, Minister of State for Commerce and Industry in his chamber and discussed the issues.The MoS has suggested to highlight the issues concerning providing a level playing field for the spinning industry which would help to improve its competitiveness and growth.