Chinese exporters are increasingly dumping cheap Chinese man-made fabric in India. This surge in recent months, the industry believes, is due to fear surrounding implementation of Quality Control Order (QCO). They now call for stricter action to address this concern.

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In the last four years, there has been over 50 percent rise in the man-made textiles coming from China into India.

Top countries India imports manmade textiles from ($ million):

Sanjay Jain, Managing Director of TT Limited and Chairman of ICC National Committee on Textiles claimed, “Imports of fabric especially from China have been of concern in the manmade fabric segment. This is because China has huge capacity and huge advantages.”

He went on to add, “We have all known they (China) have been known for underpricing. This sort of dumping has ruined the industry. There has been an increase in the same in the last one or two years as the global market is down and they have a lot of spare capacity.”

Meanwhile, in a recent letter by the All India Knitters Association (AIKA) to the Principal Secretary, it has urged the government to not just implement QCO on raw materials but also on finished products. As per estimates, in 2023-2024 (April-August), other knitted or crocheted fabrics of synthetic fabrics coming from China stood at 504 tonnes per day in 2023-2024 (April-Aug) as against 203 tonnes per day in 2019-2020.

Knitted or crocheted fabrics of synthetic fibres imported from China:

Source: All India Knitters Association Data analysis

Meanwhile, the letter by the All India Knitters Association highlights the dichotomy between the pricing of imported knitted or crocheted fabrics of synthetic fabrics and the export price of polyester yarn. "The average price is $1.41 per kg as against the average export price of polyester yarn which is $1.50 per kg.”

As per the association’s submission to the government, the import value of knitted or crocheted fabrics of synthetic fibres should be around $4 per kg.

Knitted or crocheted fabrics of synthetic fibres imported from China:

Source: Trade data

“While the price has declined close to 40 percent in the last four years, the quantity of imports has zoomed over 140 percent.” This situation is alarming for domestic players. Jain believes if this trend continues, the domestic players will continue to bleed and leave a long-term impact.

It also highlighted, imports of synthetic knitted fabrics from China are grossly undervalued leading to a loss of Rs 5,700 crore per annum to the exchequer (in direct and indirect taxes). Further, All India Knitters Association has cautioned the government on the different Indian ports clearing fabric at different assessable values.

The sudden upward trend for man-made fibre or fabrics started last year which was largely on account of last year’s skyrocketing cotton prices. This pushed many domestic small and medium units to compromise on quality to meet the domestic textile demand at lower cost.

Sources tell CNBC-TV18, “It’s concerning to find poor quality fabric in the market. This further hamper India’s aspiration to grow its textile business with a large focus on improved quality.” The dumping of cheap and poor-quality fabric can hinder India’s $100 billion export aspiration by 2030.

With the cotton crop expected to touch a 15-year low in 2023-2024, a rise in prices is anticipated, further paving way for more textile — natural and manmade — hitting the domestic market.

On one hand, the cheap man-made fabric supported some domestic players to stay afloat during such price volatility, on the other hand, it has become an eyesore for another set of domestic players.

Citing the efforts of the Indonesian government that launched a safeguard investigation to understand the impact of imports on their domestic market, Jain, without quantifying the losses, told CNBC-TV18, “An action is really needed to address the dumping issue.”

He added, “The rates at which the import is taking place is a big question as that comes at a cost. A minimum floor price must be set for which import duty should be charged so that we are not suffering due to cheap imports.”

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(Edited by : Sangam Singh)

First Published:Nov 6, 2023 10:43 PM IST