(Image source from: Livemint)
The government on Tuesday announced to double the tax on imports on over 300 textile products to 20 percent as the world's sizable cotton manufacturer tries to curb rising imports from China.
It was the second tax hike on textiles in as many months after an increase on other products including fiber and apparels earlier this month.
The decisions are anticipated to render relief to the domestic textile industry, which has been hit by cheaper imports. India's entire imports of textiles increased by 16 percent to a record $7 billion in the fiscal year to March 2018. Of this, around $3 billion was from China.
The authorities did not unwrap details of the 328 textile products that will be subject to the duty increase announced on Tuesday.
Sanjay Jain, president of the Confederation of Indian Textile Industry, told Reuters he did not expect China to retaliate to the Indian duty increases as it still has a trade surplus with India.
He said India's textile product imports could fall to $6 billion in 2018/19 as a result of the tax hike to 20 percent.
However, the 20 percent tariff will be inapplicable due to FTA to products sourced from Bangladesh, Vietnam and Cambodia countries.
Industry officials say in the last few months Chinese fiber has been shipped to Bangladesh and processed and exported to India with zero duty.
"Rules of origin need to be implemented for textile products. Otherwise, Chinese products will land from other countries," said a Mumbai-based garment exporter.
Jain said India's textile and garment exports could rise 8 percent to $40 billion in 2018/19 due to a weak rupee and as the government is expected to introduce incentives to boost overseas sales.
India's trade differences with the United States have likewise been rising since President Donald Trump took office.
In June, India, the world's biggest buyer of the U.S. almonds decided to increase import tariffs on almonds and some other U.S. imports by 20 percent.
The increased tariff on the U.S. goods will be applicable from 18 September.
By Sowmya Sangam