The Northern India Textile Mills’ Association (NITMA) has formally sought the urgent intervention of the Ministry of Textiles and the Ministry of Commerce and Industry to address a critical "Inverted Duty Structure" currently penalizing domestic manufacturers.
As the review of the ASEAN-India Trade in Goods Agreement (AITIGA) nears its conclusion, the industry body warns that failing to correct this anomaly will stifle domestic production and favour foreign imports.
The Structural Flaw: Taxing Raw Materials, Not Finished Goods
NITMA highlighted a long standing anomaly under the current India-ASEAN FTA where raw materials are taxed higher than finished products, making Indian manufactured yarn uncompetitive against imports from ASEAN nations.
Raw Material (Polyester Staple Fibre - HS 55032000): Attracts a Basic Customs Duty (BCD) of 5.5%.
Finished Product (Polyester Spun Yarn - HS 55092100): Imported at Zero Duty under the current FTA.
Alarming Surge in Imports
The impact of this duty disparity has been devastating. Data from the Department of Commerce reveals an exponential surge in duty-free imports of Polyester Spun Yarn (PSY), which has eroded the market share of Indian mills:
Financial Year Import Quantity (Mn Kgs) Value (Mn USD) Growth Status
2010-11 8.4 $24.63 Pre-surge baseline
2022-23 82.7 $153.93 ~10x Increase
NITMA’s Request: Tariff Parity
NITMA has submitted a formal request to the Ministries for Tariff Parity in the revised AITIGA framework. The association proposes that:
Polyester Staple Fibre and Polyester Spun Yarn must be treated equally. Both should either be included in the duty-free list or both should be excluded to ensure fair competition.
"Now or Never" Moment for Domestic Capacity
India currently boasts a robust ecosystem of over 150 active PSY manufacturers, with an additional 500 units capable of immediate production if a level playing field is restored. NITMA emphasized that while the government's recent decision to rescind Quality Control Orders (QCOs) on PSF was a welcome relief, the structural tariff issue remains the final hurdle to reviving dormant capacities and securing employment for lakhs of workers.
"This anomaly effectively subsidizes foreign manufacturers at the cost of Indian industry," the association stated. "With the AITIGA review reaching its final stages, we face a 'now or never' moment to ensure that our domestic value chain is not undermined by lopsided trade terms."
A fair tariff regime is essential for India to achieve its ambitious target of a $350 billion textile market and $100 billion in exports by 2030.
NITMA expressed full confidence that the Ministries of Commerce and Textiles will rectify this prolonged error to safeguard the "Make in India" vision.
CREDITS: The article is taken directly from NITMA official WhatsApp chat. The content has not been edited and reviewed by us.
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