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Weavers want hike in import duty on chinese silk fabric

Weavers want hike in import duty on chinese silk fabric Source: fibre2fashion news desk - india
Date: 23-03-2011
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In the Union Budget recently, the basic customs duty was reduced on the import of raw silk from China. However, the people associated with the famous Banarasi silk industry believe that a hike in the import duty on silk fabrics is a must to protect the sheen of Indian silk fabric.

"Although, we welcome the reduction in customs duty on raw silk, the full benefit of this reduction will go to the silk industry and poor weavers only if the import duty on silk fabric is increased from 10% to 40%," said Narendra Kapoor, former president of Eastern UP Exporters' Association (EUPEA).

In the Union Budget 2011-12, the basic customs duty on raw silk was reduced from 30% to 5%.

Kapoor also sent a letter to Monica Garg, joint secretary ( textiles), urging her to increase the import duty on silk fabric.

In support of his demand, he drew attention to some basic facts.

Kapoor said that in 2005, per day import of silk fabric was about four lakh metres. By 2010, this figure shot up by four times and about 16 lakh metres of silk fabric per day was imported from China. This huge import adversely affected the production of silk fabrics like chiffon, crape, and georgette in Varanasi, Bangalore, Surat and other such centres in the country.

Elaborating his point, Kapoor said that due to this heavy cheap import of 16 lakh metres of silk fabric, weavers lost their wages and allied job work at the rate of Rs 25 per (minimum) metre totalling a loss of Rs 4 crore per day. Manufactures and retailers started incurring losses at the rate of Rs 50 per metre per day totalling to Rs 8 crore.

It means that in a year, the Indian silk industry is losing about Rs 4,400 crore, he added.

He said that mostly 60-gm quality of silk fabric comes to India from China, and for this 60-gm quality, approximately 85-gm silk is consumed.

"It means that about 35,000-metric tonnes of silk yarn is consumed in making 16 lakh metres of silk fabric, which comes to India. If we discourage this import, China will have a surplus quantity of silk yarn. And it will compel China to reduce the rate of silk yarn," he said adding that increase in duty on imported silk fabric will ultimately benefit the Indian weavers.

Not only Kapoor but other players of the field also demand a hike in duty on the import of silk fabrics.

The Banarasi Vastra Udyog Sangh (BVUS) also demands an increase in anti-dumping duty on silk fabrics up to 40%, and abolition of anti-dumping duty on raw silk.

G K Kediya, convener of Yarn Development Committee of BVUS, welcomes the reduction in customs duty on raw silk, but at the same time he also holds the policies of the Central government responsible for the threat from China that is capturing the domestic silk market.

According to him, the price of Chinese raw silk increased from Rs 1,750 per kg in August 2010 to Rs 3,300 per kg (almost 88%) in December 2010.

He said that anti-dumping duty was imposed on silk fabrics on April 27, 2006. At present, no anti-dumping duty is applicable on 60-gm crape silk.

He said that the basic duty on silk fabrics should be raised to 40% and it should be kept in a special category. Anjani Jhunjhunwala, a silk trader, also feels that the local silk industry cannot be saved unless duty is increased on Chinese silk fabrics.

It may be mentioned here that an exodus of weavers was noticed in this region due to slump in the silk industry. A large number of weavers abandoned their traditional occupation, and either migrated to other cities in search of livelihoods as unskilled labourers or became rickshaw pullers or brick-kiln workers. According to K P Verma, assistant director (handloom), presently there are 55,000 handloom weavers in Varanasi while this figure was 1.25 lakh 10 years ago.

Kapoor said that an hike in import duty on silk fabrics will not only benefit the poor weavers but also help the traders and exporters in increasing the export volume. According to him, presently the export volume of Indian silk fabrics is about Rs 3,000 crore while the share of Varanasi is about Rs 90 crore. The share of Banarasi silk fabrics in export is about 2.5% to 3%, said Kapoor.

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