Rising imports of used garment hit apparel industry

At a time when the Rs 2,50,000-crore domestic apparel industry faces a severe demand slowdown, rising imports of used garments are adding to the woes of garment manufacturers.

Categorised as restricted item (which means import not possible without government licences), the government has issued only 16 licences so far for players only in Kandla Specialised Economic Zone  (SEZ). Import of used garments elsewhere in the country is banned.

While these 16 authorised importers have been bringing in used garments into India already, a number of unauthorised importers also bring in several consignments at Kolkata, Chennai and Mumbai ports. Thus, unauthorised importers contribute equavalent to the quantity of official imports if not more.

 

ADDING TO THE WOES

• So far, the government has issued 16 licences for used garment imports for players only in the Kandla special economic zone
   
• Imports of used garments elsewhere in the country are banned
   
• However, a number of unauthorised importers are bringing in used garments at the Kolkata, Chennai and Mumbai ports
   
• Unauthorised imports of used garments, according to industry estimates, are equal to official imports if not more
   
• Nearly 90 containers worth $40,000 each of used garments, primarily from the US and Europe, arrive in Indian ports every month, according to industry estimates
   
• Imports of used garments, traders say, have doubled in the past year due to malpractices

"The domestic apparel industry passes through tough times already, imports of used garments has worsened the overall scenario further. Economic conditions of the  organised players therefore has toughened over the last few years," said Rahul Mehta, President, Clothing Manufacturers Association of India (CMAI).

According to industry estimates, overall 90 containers worth $40,000 each of used garments primarily from the United States, European countries etc hit Indian ports every month. "Its import has doubled in the last one year due to importers malpractices," said an importer on condition of anonymity.

According to industry sources, importers bring in fresh garments by mis-declaring the container as used garments for evading taxes. As against upto 15% of taxes levied on fresh garments, the used ones attract taxes on per piece basis, which works out to negligible.

Being a restricted category item, used garments are imported by even large organised sector player, said the importer. "In case the consignment is caught by the department of customs, which is very rare, importers pay a small penalty and get the goods cleared. This has become a regular practice".

Meanwhile, worsening the scenario further, the government of India is looking to issue 200 fresh licences to increase import of used garments. 

"We have protested the government's proposed move to issue fresh licenses," said Mehta.

Of the Rs 2,50,000 crore size of domestic apparel industry, organised market contributes Rs 74,250 crore (30%) whereas unorganised market constitutes the remaining Rs 1,75,750 crore (70%). Speaking at 63rd Garments Fair here in Wednesday Mehta stated that the domestic apparel industry has the potential to double in next seven years.

CMAI further urged the government to speed up aggressive follow up for Free Trade Agreement (FTA) with EU and other countries in addition to keep garments in the lowest GST (goods and services tax) list.

Inaugurating the 63rd Garments Fair organised by CMAI, Union Textiles Minister Smruti Irani appealed to textiles players to take part aggressively in Pradhan Mantri Suraksha Bima Yojana by paying just Re 1 per month for Rs 2,00,000 insurance for workers.