Level Playing field is essential for improving the Competitiveness of the Polyester Yarn and Acrylic Fibre sector

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). Formed in 1958, the association represents industry for all policy matters and disseminates information apart from conducting conferences, exhibitions, seminars & workshops. A NITMA delegation led by Shri. Sanjay Garg, President NITMA, had a fruitful meeting with Sh. Ravi Capoor, Secretary Textiles to resolve the critical issues concerning the Textiles Mills sector. The other members in the delegation were Sh. Mukesh Kumar Tyagi, Sr. Vice President, Sh. Sidharth Khanna, Director Arisudana Industries Ltd.,Dr. Ravinder Verma, MD, Ganga Acrowools Ltd. And Sh. Anil Kumar Vasupillai, SG, NITMA.

1.The anomaly in the FTA agreements with Indonesia & Vietnam leading to closure of MSME Spinning Mills:

On the issue of an existing anomaly due the ASEAN FTA, it was explained that due the inclusion of the finished product of the mills, i.e. Polyester Staple Yarn-HS code – 55092100, in the list of items in the said FTA, it has been cleared of imports with ASEAN certificate @ zero duty. Hence there has been a surge in imports particularly from Indonesia and Vietnam, mostly in the post-GST period.

It was indicated that, while the Yarn is cleared zero duty, its immediate raw material viz. Polyester Staple Fibre HS code is being imported at full duty of 5.5% since it is NOT included in the list of items of the FTA. This has denied a level playing field for the Indian Spinning Mills as compared to their counterparts in Indonesia etc.

It was mentioned that this surge in imports has been happening of late, as some of our existing duties which were acting as a safeguard against imports in the pre-GST period were removed, while the government introduced the GST. Post-GST, with the removal of CENVAT and SAD, polyester yarn is being cleared @ zero duty.

NITMA suggested for urgent exclusion of Polyester Staple Yarn (PSY) from the FTA list or inclusion of its raw material, the PSF, in the FTA list of items. It is submitted that this would allow strengthen the vision of ‘’Make in India’’ and also provide the much needed competitiveness to the Spinning Mills products, which has been undergoing stress due to this grave anomaly, affecting its future and survival. As huge capacity are being added in our competing countries.

Secretary assured that the Textile Ministry is ready to facilitate the industry by all means to enhance the growth competitiveness of industry and hence necessary steps are being taken to unleash the growth of the Manmade Textiles sector, which has huge potential for growth in India. He informed that important decisions are expected in the next GST council meeting which will further help to improve the competitiveness across the entire textile value chain.

Secretary further said that it may be difficult to make the changes in the ASEAN agreement and it may also take little longer to review the current ASEAN Trade agreement. He reiterated that he has understood the difficulties being faced by this segment and is sincerely willing to provide Yarn manufacturing sector with level playing field. He mentioned that it may be possible to identify other trade related measures to arrest the surge in imports, which have been affecting the competitiveness of the Mills sector and the entire value chain. He suggested NITMA to point out some Non Tariff Barrier (NTB) measures, such as, checking the quality standard of the imported yarn, which if introduced as a compliance measure could help make the hike in imports yarn reversed.

Secretary while discussing a way forward for resolving the issue has suggested that NITMA may carry out a study to identify the kind of NTBs which include the Environment related, Quality of the Yarn, Labour or Safety and health standards certifications which India can introduce and can make it mandatory and to be adhered by the exporting units of various countries. He said this could clearly work and hence can be introduced to arrest huge imports.

He also mentioned that in such an event, while India mandates that the exporting countries to comply with these NTB measures, it is also bound upon Indian industry to comply with these measures, which involve certain compliance cost and which would definitely pay off in the long-run as the industry become globally competent in the event of increasing sustainable processes and compliant measures which are being sought by International Brands etc.

2.Level playing field for MMF industry by removing the Anti-dumping duty (ADD) on Acrylic Fibre for enhancing competitiveness in the value chain

NITMA delegation explained to Secretary that the imposition of ADD on the Acrylic Fibre, which is also known as poor man’s wool due to its affordability, has been continuing for the last 23 years against almost all exporting countries, hence making the raw material costly for domestic Acrylic yarn making sector and also making the value added downstream sector uncompetitive and its future growth uncertain. The story will be clear if one compares with Bangladesh, which exported USD 2.5 billion worth of sweater products, whereas India only exported USD 0.07 billion in 2018, though, both were at par in 1992.

The Acrylic Fibrés value added downstream segment include sweater and shawl making, which has huge growth potential both in our domestic and export markets. These are mostly in the unorganized sector employing about 10 lakhs persons in India. The imposition for ADD on Acrylic Fibre has been pressed by 3 players in India, and all of them operates with huge revenues and profit margins and employs about only about 3500 persons.

NITMA requested Secretary Textiles to recommend to the Government to take decision for abolition of the existing ADD and also decide on not to impose any fresh ADD on Acrylic fibre to help its overall growth and competitiveness of the entire textile sector and also in view of larger public interest of livelihood to millions.

Secretary assured that he will take the necessary steps to resolve this important issue which has been hurting the growth and competitiveness of the Acrylic sector, a potential manmade Textile sector area in India. He said that since the procedure of imposition ADD is being decided by the DGTR, NITMA need to submit all data and details to the DG and explain the same in the public hearing. He has also suggested meeting DGTR urgently.

Secretary also said that NITMA need to act fast in explaining their issues to the other concerned departments in the Government such as the Commerce Minister, Commerce Secretary, Revenue Secretary, etc. he also said that the issue need to brought to the knowledge of the Textile Minister and Finance Minister to upraise them about the critical condition of the Spinning industry of Polyester Yarn and particularly that of the Acrylic Fibre and request their intervention to solve this grave issues urgently which has been continuing for such a long time of 23 years, hurting the growth of one of the high potential sweater making segments of our textile industry.

3.Issues on availability of Cotton in India for spinning Mills at competitive prices

NITMA explained the current impasse in the cotton market and said that may be due to the uncertainty in quick decisions has led to huge hike in cotton raw material prices affecting both the raw material supply and the working capital availability. NITMA has requested Secretary to intervene urgently to resolve this crisis situation so that both the cotton farmer and the spinning industry will be in a win-win situation.

Secretary assured that government is closely following the cotton economy and its supply side issues and will come out with long-term solutions like Direct Benefit Transfer (DBT) to the Farmer for their Cotton related support and also ensure balanced price trend for Cotton Fibre which would help reduce the stress for the spinning industry.

4.One mega Textile Park of 1000 acres having textile Eco-system for Punjab

NITMA delegation requested Secretary to consider locating one of the ten proposed Mega Textiles Parks of the Ministry of Textiles in the State of Punjab so that it can act as a Textile growth hub across the Northern region to drive the textile eco-system surrounded by clusters like Ludhiana etc. for generating employment and exports in a sustainable manner for future.

Secretary said that he is more than happy to offer, provided the main criterion of making availability of the 1000 acre land by the State government is ensured. He suggested NITMA to work closely with Ministry and the State government for realizing the vision successful.

5.NITMA also invited Secretary to address the Textile fraternity of Ludhiana so that new vigour and dynamism can be generated from the young entrepreneurs to go out for investment and exports in the area of MMF textiles which is bound to unleash its growth together with technical textiles and blends.

Secretary said he will be willing to come and meet the captains of the textile industry in the northern region and suggested to be in touch with his office for a date and time of the interactive meeting in Ludhiana.