Agri Business

‘Remove anti-dumping duty on VSF’

Rajalakshmi Nirmal Chennai | Updated on October 22, 2020

Textile manufacturers say move will help them compete in export markets

To compete in the fast-growing, man-made fibre market globally, raw material cost for textile manufacturers in India should come down. This, the industry believes, can happen only if anti-dumping duty (ADD) on viscose staple fibre (VSF) is scrapped. Due to the ADD on VSF ($0.103/kg to $0.512/kg on imports from Indonesia, Thailand and China), there has been large-scale import of viscose spun yarn, said spinners from Coimbatore, the textile hub of India, in a conversation with BusinessLine.

Viscose spun yarn (VSY) imports were to the tune of 12,748 tonnes in September, a jump of 75 per cent over the same month last year. The average monthly imports of VSY this year is 5,392 tonnes, up from 4,875 tonnes last year, according to data of Ministry of Commerce and Industry. Given that ADD on Purified Terephthalic Acid (PTA) – the raw material for Polyester Staple Fibre was removed in the budget in February 2020, the textile manufacturing industry is now demanding withdrawal of ADD on VSF to help them stay competitive in the global market.

Benefits to MSMEs

Post withdrawal of ADD on PTA, there has been increase in production of polyester spun yarn (PSY) in India and imports have fallen benefitting weavers, knitters, dyers and other players in the PSF value chain. Additionally, polyester fibre prices in India have come down to match China’s – ₹65/kg, giving Indian spinners a competitive edge in export market, according to market sources.

The ADD on VSF was first levied in 2010 and ever since, the export competitiveness of players in the value chain have been hit, say observers. As per industry data, the export of viscose fabric has dropped 25 per cent between 2016-17 and 2019-20; exports of VSF based readymade garments have also fallen. India’s high-cost raw material is the reason why the country is losing out to smaller players from Bangladesh, Vietnam, Sri Lanka, Nepal and Pakistan in the international market, according to textile manufacturers. Prabhu Dhamodharan, Convenor of Indian Texpreneurs Federation, said, “Viscose’s value chain stakeholders, particularly in spinning, have invested heavily in ultra-modern technology over the past few years. The massive import of viscose spun yarn coming in at a price that is ₹20 less than the manufacturing cost for the spinners, has created a turbulence in the sector. We need to eliminate this business uncertainty by keeping policies favourable for the industry to get raw materials at competitive price.”


Competitive prices

Raja M Shanmugam, President, Tiruppur Exporters’ Association, said, “Protectionism won’t work, global markets are connected. Only if textile manufacturers in India get raw materials at competitive price, will they be able to compete globally and grab the opportunity that has opened up with anti-China wave across the globe…” LKM Suresh, President, TamilNadu Federation of Powerloom Associations, said, “Due to higher cost of raw material, spinning mills are offering their yarn at a higher price compared to imported yarn from China. But imported yarn is also having its own set of challenges including longer lead times and fluctuations in prices. So, rather than restricting yarn imports, the government should remove ADD on viscose fibre and provide level playing field to spinners who in turn will be able to supply the yarn at internationally-competitive prices that will help SME weavers.”

In India, there is only one manufacturer of VSF. The price of the fibre from this player is ₹115/kg; landed cost of imported VSF without ADD is ₹103/kg. If ADD on VSF is removed, the VSF manufacturer will also be compelled to reduce price which will benefit yarn manufacturers, say industry veterans.

Published on October 21, 2020

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