Government doubles import duty on over 50 textile products

Textile and clothing

The government has doubled import duty on over 50 textile products -- like jackets, suits and carpets -- to 20 percent, a move that is aimed at promoting domestic manufacturing.

The Central Board of indirect Taxes and Custom (CBIC) late last night notified list of textile products on which duties have been hiked to 20 percent. It has also raised the ad-valorem rate of duty for certain items.

The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.

"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.

Experts said as per WTO norms, India will not be able to give any further incentive to the textile sector and the government has increased the import duties with a view to encourage domestic manufacturing.

EY Partner Abhishek Jain said: "Aligned to the 'Make in India' initiative, the increased customs duty on import of a range of textile products should entail the domestic manufacturing of these products witnessing a growth".

The customs duty increases on certain finished textile products would lead to a cost advantage for Indian textile manufacturing and advance the 'make in India' philosophy, said M S Mani, Partner, Deloitte India.

"Many foreign companies may now consider manufacturing in India to cater to the domestic demand as well," he added.

Imports of textile yarn, fabric, made-up articles grew by 8.58 percent to $168.64 million in June.

However, exports of Cotton Yarn/Fabrics/made-ups, Handloom Products etc. grew by 24 per cent to $986.2 million. Man-made Yarn/Fabrics/made-ups exports grew 8.45 percent to $403.4 million. Exports of all textile ready made garments dipped by 12.3 percent to $13.5 billion.