Indian Silk Industry Demands Hike in Fabric Import Duty

In the Indian Union Budget, It has been announced that the import duty on raw silk (not thrown) was reduced from 30 percent to just 5 percent.

But the silk trade is demanding that in order to ensure that the fruit of the fall in levy reaches the silk sector, particularly the weavers, import duty on silk fabrics should be hiked from 10 percent to 40 percent.

This was echoed by Mr Narendra Kapoor, former President of Eastern UP Exporters' Association (EUPEA) and Mr Jagdish Das, President of Banarasi Vastra Udyog Sangh (BVUS), when fibre2fashion contacted them for their reactions.

Speaking to fibre2fashion, Mr Kapoor said, "In 2005, about 400,000 meters of silk fabric was imported, which has now surged four times to around 1.6 million meters. This has mainly affected silk manufacturing centres like Varanasi, Bangalore, Surat and other centres in India.

He continued, "Mainly 60-gms quality of silk fabrics is imported from China, for which approximately 85-gms silk yarn is consumed. So, approximately 35,000 tons of silk yarn is consumed to produce 1.6 million meters of fabrics".

"If this import is discouraged, the Chinese will have surplus yarn on hand, which will ultimately lead to a fall in prices of silk yarn, which have risen stupendously in recent times. For this reason alone, we are demanding a hike in silk fabric import duty", he informed.

Mr Jagdish Das hailed the reduction of import duty on raw silk. He said, "This was a long pending demand of the Indian silk industry, which was protesting the inverted duty structure, wherein, 30 percent duty was levied on raw silk and just 10 percent on silk fabrics".

He noted by saying, "Chinese raw silk prices jumped from only Rs 1,750 per kg in August 2010 to a whopping Rs 3,300 per kg in December 2010, an astounding hike of 88 percent in just five months".

The Sangh is also voracious in its demand that, customs duty on silk fabrics be hiked from 10 percent to 40 percent. The body has been lobbying for long to dismantle the inverted duty structure.