On October 27, the central committee of the consumption tax and customs in India (CBEC) in website notice, decided to increase involving customs duty number 50 to 63 chapter of textile clothing import tariffs, on the basis of the current 10% to 15%, import tax rate to 20% - 25%, the rate is higher than the 25% of the textile and clothing products (mainly textile materials, 30% import duties) will remain unchanged.
China and India are close to trade in textiles and clothing. China is the first source of textile clothing imported from India.
According to the ITC data, China's exports of textiles to India totaled us $4.09 billion in 2016, accounting for 67.3 per cent of India's total textile imports.
The import tariff will be greatly affected by the high import tariff of India.
Development of textile and clothing industry in India
The textile industry occupies an extremely important position in the Indian national economy.
The textile industry contributed 2 per cent of India's GDP, 10 per cent of its manufacturing output and 13 per cent of its exports, according to India's 2016-2017 textile industry annual report.
The strength of India's textile industry has grown in recent years, with ample labor resources and textile materials, as well as government policy support.
India is now the world's largest cotton producer, with 6096 million tons of cotton in 2016, according to the U.S. department of agriculture.
Because of the non-market factors of domestic cotton quality raw materials to the negative impact of cotton spinning enterprises in China, making India cotton spinning industry obtained rapid development in recent years, the Indian cotton yarn are mainly exported to countries such as China, Bangladesh and Pakistan.
Indian textile industry has rich raw material resources, complete, production cost competitive industry value chain, and relatively perfect infrastructure, textile workers, professional technology and language ability is strong, the domestic and international market to expand rapidly, friendly investment policy, social political and economic stability, and many other advantages.
At the same time, there are many problems in India's textile industry behind the rapid development.
India's textile enterprises are small, under-invested and relatively dispersed, and the popularization of high-tech production technology still needs to be improved, which limits its capacity.
The relatively backward management system also causes some obstacles to the development of enterprises.
India's textile apparel exports nearly $40 billion a year, though it is the second largest in the world, but it is still a far cry from the $27 billion in exports to China.
What impact will India's overall tariff increase on textile and garment export enterprises in China?
In 2016, China exported more than $100 million of the total seven categories of textiles and clothing products exported to India, which will face a tax rate of 1 to 1.5 times the tax rate adjustment.
For protecting domestic industry development and reverse the trade deficit adverse, the purpose of India the increase import tax rates, will bring great influence to our country textile clothing export India, India to China's exports of textile clothing enterprise in large losses.
It is recommended that relevant enterprises should prepare the risk prevention of export orders in time, and trade with Indian clients in the way of goods delivery.