Benaras silk industry reels under Chinese imports

On November 28, the silk industry in Varanasi (Benaras) observed a token strike and took out a rally in which over 50,000 weavers and traders took part. The reason was the famous Benaras silk industry is under threat from Chinese silk fabrics.

“The Centre has slapped a 30 per cent Customs duty on raw silk, but on silk fabrics the duty is 10 per cent. This is against the general practice world over where Customs duty on raw material is lower than the duty on finished goods,” said Mr G.K. Kedia, Convenor – Yarn Development Committee of the Banarasi Cloth Producers Association.

China has almost monopolised the silk fabrics export market. “In its strategy to dominate the export market, it has increased the price of raw silk to Rs 2,900. In August, the price was Rs 1,750. China's raw silk export now is almost nil,” Mr Kedia said.

The price at which China exports silk fabrics cannot even cover the cost of raw silk here, he said.

“The Centre had raised the import duty on raw silk to protect domestic producers. But the fact is that domestic raw silk is nowhere near the quality of Chinese silk. Domestic raw silk is not of uniform thickness due to poor quality of cocoon and our producers use obsolete reeling machines to make yarn,” Mr Kedia said.

Our raw silk has to be twisted before use whereas such a thing is not needed for Chinese raw silk.

“In Varanasi, powerlooms do not twist raw silk and, therefore, to presume Chinese raw silk poses threat to domestic raw silk is wrong,” he said.

Raw silk prices

Also, domestic raw silk producers have raised the prices in tune with the increase in Chinese raw silk.

“If the Government thinks it is earning revenue through higher duty, it is not so. Nearly 80 per cent of raw silk is imported under advance licences against export of silk fabrics. Even under import of advance licence there is anomaly, besides which there is under-invoicing,” said Mr Kedia.

“Also, import duty on twisted raw silk is 21 per cent against 30 per cent for raw silk. This has affected all units that are engaged in twisting,” he said.

According to trade sources, raw silk is being imported even from countries where it is not produced.

During 2009-10, imports were made from Brazil (69 tonnes), Uzbekistan (82 tonnes), Iran (29 tonnes), Korea (16 tonnes) and Vietnam (46 tonnes). Total raw silk imports were 242 tonnes against 75 tonnes a year earlier.

“This is happening since there is no duty on imports from these countries,” said a source.

Meanwhile, the Yarn Development Committee has written to the Union Finance Minister, Mr Pranab Mukherjee, and the Minister for Commerce and Industry, Mr Anand Sharma, demanding that import duty on raw silk be abolished and the levy on silk fabrics import be raised to 40 per cent.

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