Shoppers will have to shell out more for high-end jackets, suits and dresses of international brands as the government has doubled import duty on over 50 textile products to 20 per cent in line with its 'Make in India' initiative. The imported products which have become more expensive include woven fabrics, dresses, trousers, suits, carpets and baby garments. This will have an impact on international brands like Burberry, Chanel, Fendi and Gucci which sell here garments made in other manufacturing hubs.
The Central Board of Indirect Taxes and Customs (CBIC) notification on the duty hike issued on Monday night to boost the domestic garment manufacturing sector, comes at a time when India has lost out its garment manufacturing edge to neighbouring countries of China, Bangladesh and Vietnam. The government has also raised the ad-valorem rate of duty for certain items.
The Indian fashion fraternity, while hailing the move to boost domestic apparel, has mixed views regarding the impact that the duty increase will have on the market. Their fear is that even the prices of domestic apparel which use foreign inputs could rise.
As designer Suket Dhir shares, "A lot of products like ribbons and tape used in lingerie and trims get imported from either China or Hong Kong because their highest quality manufacturing doesn't happen in India. As a result, the designers will be compelled to import them regardless, which will lead to an increase in prices.''
Fashion Design Council of India president, Sunil Sethi said, "From a patriotic point of view it does seem that we should promote our own industry. But right now our biggest problem is increasing our exports, so these sort of additional tariffs are not very friendly tariffs with the countries to which we want to export."
That said, they are hopeful for the long-term impact that this move will have. While Sethi believes that trade restrictions aren't the only way to promote domestic goods, he continues, "It seems that the government is taking a right call in trying to promote the domestic manufacturing. The patriotic Indian in me says we must do this, but the customer in me understands the extra load on my pocket. But yes, in the apparel segment, it will definitely help the domestic market and I am all for it."
Dhir also states, "In the long run it might be a good thing. For the time being it will be very difficult, but we should soon see some manufacturing in India in six months to a year. Those who are currently suffering competition from products from abroad will be encouraged to produce better and service Indian customers."
"The duties have been doubled on most of the textile products. It will help boost domestic manufacturing but least developed countries including Bangladesh would continue to enjoy duty free access to Indian markets," FIEO DG Ajay Sahai said.
The duty has been doubled to 20 per cent on 23 knitted garments items and one knitted fabric item as well, Tirupur Exporters' Association (TEA) president Raja M Shanmugham said. "This will help in protecting the industry and also employment," he added.
On some items, the rate would be 20 per cent or Rs 38 a metre, whichever is higher. India last increased import duties on textiles in October 2017, which was for a broader set of products. However, apparel exports are witnessing downtrend since then. Exports of all textile readymade garments dipped by 12.3 per cent to $13.5 billion in June 2018. Meanwhile, imports of textile yarn, fabric and made-up articles into the country grew by 8.58 per cent to $168.64 million in June.