Indian apparel makers want additional Covid Duty on imports of readymade garments from Bangladesh and other countries with whom India has free trade agreements.
The Clothing Manufacturers Association of India (CMAI), that represents leading firms including Aditya Birla Fashion and Lifestyle, Arvind Fashions, Future Group, Shoppers Stop, Raymond, has urged the Indian government to consider levying a temporary duty for a period of 12 months.
"The additional duty will result in a level-playing field for domestic manufacturers, and help them compete with the Bangladesh garment industry, which has currently at least 15% cheaper production cost," said The Clothing Manufacturers Association of India (CMAI), reported India Retailing.
According to the submission made to the textile ministry and ministry of commerce and industry, the apex body has suggested a short-term duty on imports of both readymade garments and fabrics from all countries, including those with who India has zero-duty agreements. This move comes as the domestic garment manufacturing industry anticipates a slowdown of demand for a year severely impacting business.
"The additional duty will result in a level-playing field for domestic manufacturers, and help them compete with the Bangladesh garment industry, which has currently at least 15% cheaper production cost," said CMAI in a press statement.
"Additionally, the levy will enable the government to collect approximately USD 100 – 150 million for its fight against Covid-19 (depending on the quantum of duty imposed)," the statement added.
A recent study by CMAI estimates that there will be about 40% drop in domestic demand of apparel due to lockdown and reduced demand as a result of the pandemic. Over 20% of the domestic units may face closure, being unable to survive the current crisis. The reduction in demand and revenue levels will lead to downsizing of operations, closure of units and job losses in Indian textile and apparel industry to the tune of 1 crore across the entire textile value chain.
CMAI had been engaging in dialogues with the government over the challenges and impact of duty-free imports of garments from Bangladesh, and back-door entry of Chinese fabrics on the MSME-dominated domestic garment industry for some time now.