India has been the largest exporter of cotton for many decades now and it accounts for 12 percent of the total export of the country. But lately, this textile industry has been facing competitions from the ever-increasing import of Chinese textile items. To battle this, the Government of India has actively increased the import duty on over 300 textile items with the aim to increase the business of the domestic textile industry.
In the fiscal year of 2017/2018 India suffered from a trade deficit of 1.54 billion dollars alone in textile business with China. This has given rise to a great deal of concern in the government and to tackle it, the government has doubled the import duty of 10 percent to almost 20 percent for many textile products. The textile import, which had risen to a massive amount of 7 billion dollars last fiscal year, is assumed to fall by nearly a billion with the implementation of increased import duty.
India has also shown a rise in the export of garments from other neighboring countries like Bangladesh and Cambodia. This export from neighboring countries will however not be affected by the increased import duty because the imports are protected under the Free Trade Agreements (FTA) between the countries. Sources say that the Chinese have taken advantage of this by shipping fibers to Bangladesh and then importing them to India via a 3rd party.
The domestic industry foresees good business under these changes made by the government, but the results will be evident only in the reports of the next year ending.