In the era of globalization where trans-border trade is increasingly becoming the need of the hour, the law of the land monitors that the same does not obstruct the conduct of business of the locals. The Customs Act, 1962 came into force with the objective of regulating the trade overseas.
In furtherance of the aim to promote “Make in India” mission, the Government of India has doubled the customs duty on the import of 328 textile products vide its notification date August 7, 2018. The tariff charges have increased from the existing rate of 10% to 20% under Section 159 of the Customs Act, 1962.
By this step, the Government aims to strengthen the domestic market and reduce the import from the neighbouring nations entering the Indian apparel market. As per the Confederation of Indian Textile Industry, since Bangladesh has zero duty access for all apparel products, the Chinese fabric is entering India duty free through Bangladesh. With a view to prevent the same, the textile and garment industry has represented to the ministries of commerce and textiles to make it mandatory for Bangladesh under the South Asian Free Trade Area (SAFTA) agreement to use either their own or Indian yarn and fabric in their garments to be able to supply to India at zero duty. It has also urged for the introduction of “rules of origin” for imports from Bangladesh in the said regard.
While the proposal remains under the consideration by the Government, taking recourse to such stricter measures would prevent the Chinese fabric from being made available in the Indian market without the payment of the requisite duties by using Bangladesh as channel. Also, this helps to encourage the domestic industrialists to avail and expand the scope of the textile industry.