Import duty cut weaves woe for silk famers

The Budget proposal to drastically reduce customs duty on raw silk imports has raised the hackles of silk farming community in States such as Karnataka, Tamil Nadu and Andhra Pradesh.

The Finance Minister, Mr Pranab Mukherjee, has proposed a sharp duty cut from 30 per cent to 5 per cent on all grades of silk imported into the country.

Prices of cocoons and raw silk in south India have seen a free fall by almost half in the run-up to the Budget, in anticipation of a huge duty cut. Interestingly, raw silk prices in China have firmed up by about a tenth to over $50 a kg in the immediate aftermath of the duty-cut announcement.

Growers fear that the proposed move would help China monopolise the Indian market and they may have to switch over to other lucrative and less labour-intensive crops such as coconut or turmeric among others. An estimated five million farmers depend on sericulture for livelihood, while another two million indirect jobs are created by the silk industry.

“We will have to leave mulberry cultivation. Already, rising labour costs thanks to NREGA have made matters difficult,” said Mr Vasudev Ramkumar, a silk rearer in Udumalpet, Tamil Nadu.

“Silk rearing was profitable when bivoltine cocoon prices were Rs 400 a kg and crossbreeds were Rs 300 a kg. Now, they are Rs 190-250 for bivoltine and Rs 100-120 for cross-breeds. We will have to move to turmeric, sugarcane or coconut, which are less labour-intensive. Silk rearing is labour-intensive and cannot be mechanised too much. Unlike weavers, we cannot pass on the price,” he added.“Prices are set to fall further. We cannot meet our costs as mulberry required high initial investment,” said Mr Raghupati Gowda, Vice-President, Kolar District Silkworm Rearers' Association. “We will have to take out our mulberry plants. Sericulture was wiped out in Japan.

The same will happen here, as China will monopolise the Indian market,” Mr Gowda added.

The Finance Minister's proposal is likely to benefit the weaving community in key weaving centres such as Benares, Murshidabad, Kanchipuram and Bangalore. Interestingly, States such as West Bengal, Tamil Nadu and Uttar Pradesh are headed for Assembly elections.

The silk weaving industry had claimed relief from the Government on the ground that prices of raw mulberry silk had doubled over the last year. Mr T.V. Maruthi, Proprietor of Shantala Silks, said: “The import duty on silk fabric was just 10 per cent, whereas the raw material attracted an import duty of 30 per cent. This was hurting the industry. Therefore, weavers had appealed to the government to address this anomaly.”

Mr V. Hirdaramani, Partner, Karishma Silks, said: “In a country where there is expertise to produce silk at every stage, with the poorest of the poor working in silk rearing, import duties should not have been brought down. Instead, training and know-how to produce better quality silks should be emphasised.”

Silk imports for the April-September 2010 stood at 3,149 tonnes as compared with 3,889 tonnes in the corresponding period previous year. During 2009-10, silk imports stood at 7,338 tonnes. India produces close to 20,000 tonnes of silk, while the demand is estimated to be 28,000 tonnes. The shortfall is mainly met by imports.

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