It is to be noted that the Indian government had imposed MIP on five HSN codes under Chapter 60 of knitted fabric on March 15 this year. The Directorate General of Foreign Trade (DGFT) imposed an MIP of $3.50 per kg on five specific HS codes of synthetic knitted fabrics, namely 60063100, 60063200, 60063300, 60063400, and 60069000, effective until September 15, 2024. The government had not only extended the MIP on these codes but also widened the restrictions to include eight additional HSN codes, namely 60019200, 60041000, 60049000, 60053600, 60053790, 60053900, 60062200, and 60064200, until December 31.
India’s textile industry faces challenges despite the imposition of a MIP on specific HSN codes of synthetic knitted fabrics in March.
Recent trade data reveals a surge in imports under non-MIP codes, suggesting potential manipulation to evade restrictions.
This has led to calls from industry representatives for broader application of MIP across all relevant codes within Chapter 60.
A study of the trade data from January to March 2024 and April to June 2024 shows a concerning trend. India imported 43.83 million kg of fabric under the first five codes with MIP imposed on 15 March this year. The total value of the imports was noted at $78.97 million, and the average price was $1.80 per kg in the period. The imports decreased to 8.73 million kg, with a total value of $42.55 million and an average price of $4.87 per kg in the following quarter. The total quantity, value, and average price were noted at 10.92 million kg, $60.76 million, and $5.56 per kg respectively in the July-September 2024 quarter, showing a slight decline in volume and value and an increase in the average price, as per an analysis based on the data released by India’s Ministry of Commerce.
However, the imports under HSN codes 6001, 6002, 6003, 6004, 6005, and 6006 totalled 72.56 million kg (value $138.13 million) with an average price of $1.90 per kg during April-June 2024. The volume, value, and average price were 44.70 million kg, $97.09 million, and $2.17 per kg respectively in the previous quarter, January-March 2024. The Indian industry imported 119.17 million kg of fabric valued at $205.22 million in July-September 2024 under non-MIP codes. The average price further dipped to $1.72 per kg.
The volume and value soared, and the average price of imports dipped under these codes as they were not covered under MIP. The trade data indicates that synthetic knitted fabric imports were diverted to non-MIP fabrics. Six- and eight-digit HSN codes allow customs officials to tax imported products precisely. However, the diversion of imports under non-MIP codes shows dubious practices.
Total imports of synthetic knitted fabric under MIP and non-MIP codes were 88.53 million kg in January-March 2024, 81.29 million kg in April-June 2024, and 130.09 million kg in July-September 2024. The value of the imports was $176.06 million, $180.69 million, and $265.98 million in these quarters respectively. The average price was $1.99 per kg, $2.22 per kg, and $2.04 per kg during these quarters. The total imports of both types of synthetic knitted fabric indicated a flooding-like situation continued.
Gulshan Jain, a trader from the Ludhiana market, commented on this data that MIP on six- and eight-digit HSN codes failed to restrict the influx of synthetic knitted fabric. There is a very real possibility of manipulating HSN codes, which was evident from the trade data. There is a strong need to impose MIP on the entire Chapter 60 to effectively restrict the flooding of products. The industry is consistently demanding effective measures to safeguard the domestic industry.
Fibre2Fashion News Desk (KUL)
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