The Hindu Business Line : Concern over bid to remove specific duty on textile imports from Pakistan

THE bonhomie between India and Pakistan appears to have left the domestic textile industry aggrieved because of the pressures exerted by Islamabad on New Delhi to remove the specific import duty on textiles and clothing.

As both India and Pakistan get ready to meet each other's delegation for the preparation of negative list for exchange of tariff concessions under the South Asian Preferential Trading Agreement (SAPTA) in Kathmandu from July 20 to 22, the Textile Ministry bears the heat of pressure from the Prime Minister's Office (PMO) as also the Commerce Ministry for removal of specific duties on over 300 textile and clothing items on six-digit harmonised system of trade classification, industry sources told Business Line here.

The specific duty on imports range from Rs 25 to Rs 125 per piece and removal of this shield is bound to affect the domestic industry's growth adversely with cheap textile goods inundating the indigenous markets. It is precisely the specific duty on 300-odd textile items that Islamabad is keen India removes so that Pakistan gets enhanced market access to India.

During President Musharaff's visit to India in April last, this issue figured in his talks with Prime Minister, Dr Manmohan Singh, and, apparently, as a logical corollary to giving proper shape to the composite dialogue and renewed relations with Pakistan, the PMO has been in favour of removal of this specific duty.

The Commerce Ministry too chipped in to get round the Textile Ministry that in line with reduction of import duties worldwide on industrial tariffs, India too should phase out the specific duty and reduce the overall tariff levels.

However, the Ministry of Textiles did not find any justification to do now, particularly when the domestic textile manufacturers-exporters do not want India's strong competitors abroad such as Pakistan and Bangladesh making easier inroads into the domestic markets.In the face of vocal opposition from domestic textile manufacturers, the Principal Secretary to the Prime Minister, Mr T.K.A. Nair, has convened a meeting of the officials of the Ministries of Commerce, Revenue and Textiles here on Friday to get their inputs, official sources said.

The Trade and Economic Relations Committee (TERA) headed by the Prime Minister has also asked the Ministry of External Affairs, the Department of Commerce and the Ministry of Textiles to prepare a note immediately on import of textiles and garments from the neighbouring countries in the sub-continent.

When contacted, the Indian Cotton Mills Federation (ICMF) Chairman, Mr V.K. Ladia, told this newspaper that the "industry is opposed" to the proposal of removing specific duty on imports as Islamabad has not even granted the most favoured nation status to India.

Domestic manufacturers by and large said that when the industrial countries used the multi-fibre arrangement for more than four decades by instituting a quota regime to stave off efficient producers from flooding their markets, is it not unfair to remove some form of protection to the domestic industry to adjust itself to the post-quota regime when it has to carry the battle into the industrial world.

So, any opening up of domestic markets to competitors such as Bangladesh, Pakistan and Sri Lanka would affect modernisation and expansion of the textile sector, they said adding that these countries enjoy preferential access to the developed markets, particularly Europe, while Indian textile goods do not.

They said that once specific duty is removed, cheap textile goods coming from Pakistan would affect the domestic textile industry badly.

Industry sources say that last yearPakistan's textiles export of $8.5 billion accounted for no less than 68 per cent of its export earnings in 2003-04.

Pakistan's Textile Vision, 2005 could increase textile exports to $13.8 billion this year. Hence, the domestic industry apprehends import surge from Islamabad if the cover of specific duty is lifted without adequate preparatory phase to adjust.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page