India Doubles Import Duty on 50 Textile Products

Posted by Written by Dezan Shira & Associates Reading Time: 2 minutes

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Shopping for foreign made garments could become more expensive as India has doubled its import duty on several textile products.

The move, which is in line with the Make in India initiative, comes as India continues to lose its garment manufacturing business to China, Bangladesh, and Vietnam.

On July 16, the Central Board of Indirect Taxes and Customs (CBIC) announced the doubling of tariffs on 50 textile products to 20 percent. The government also raised the ad valorem rate of duty (tax based on the value of an item) for certain items. (The official notification may be read here.)

Affected textile products include: woven fabrics, knitted garments, dresses, trousers, suits, carpets, and baby clothes.

India’s fashion retailers are, however, wary of the impact of higher duties on domestic apparel. The prices of their products will rise due to the higher cost of foreign inputs.

Currently, most designer brands source fabric and other textile items from higher quality manufacturers based in markets like China and Hong Kong.

Another challenge pointed out by industry insiders is the stress on Indian exports, which are already on a downward trend.

Additional tariffs on textile imports could make Indian exports more expensive and thereby less competitive.

In June, exports of all textile ready-made garments dipped 12.3 percent to US$13.5 billion, while imports of textile yarn, fabric, and made-up articles grew 8.58 percent to US$168.64 million.

Finally, while the raised duties may prove positive in the long-term, enabling domestic manufacturers to become more competitive – they do not apply to countries like Bangladesh, which continues to enjoy free market access to India.

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