Dumped imports, duty distortions threaten India's manufacturing competitiveness: C-DEP Research

The Industrial Supply Chain Resilience Series, comprising four reports on Nylon Filament Yarn (NFY), PET Resin, Viscose Staple Fibre (VSF) and Optical Fibre Cable (OFC), was released by former Sikkim Chief Secretary Suresh Chandra Gupta, India Foundation Director Maj Gen Dhruv C. Katoch and Centre for WTO Studies Head Dr Pritam Banerjee.

According to the reports, the four value chains are critical to India's manufacturing economy, supporting sectors such as apparel, technical textiles, packaging, FMCG, pharmaceuticals, telecom networks, broadband infrastructure, data centres and defence communications. While India has built significant manufacturing capacity through private investment and policy support, recurring supply-chain challenges are limiting capacity utilisation, affecting investment confidence and increasing reliance on imports.

The report on Nylon Filament Yarn found that India has adequate installed capacity to meet domestic demand, but dumped imports have already forced the closure of 10 domestic manufacturers. Capacity utilisation is projected to decline to over 45 per cent by FY2027-28. China's surplus NFY production is estimated to be 15-17 times the size of India's entire market, while dumping margins have been recognised at up to 55 per cent for China and 150 per cent for Vietnam. The report noted that anti-dumping duties would raise downstream production costs by less than 0.7 per cent, indicating limited impact on textile competitiveness.

The PET Resin report highlighted a 763 per cent increase in imports from China, rising from 23,142 metric tonnes in FY2021-22 to 199,704 metric tonnes in FY2024-25. It noted that China accounts for around 87 per cent of global PET resin surplus capacity, while its idle capacity alone is nearly three times India's total domestic demand. The report also flagged alleged origin manipulation and third-country routing to circumvent existing trade remedies.

The Viscose Staple Fibre report pointed to inverted customs and GST duty structures as major hurdles for domestic manufacturers. Rayon-grade wood pulp, the key raw material, attracts import duty, while finished VSF imported from ASEAN countries enters India duty-free. The report estimated that domestic manufacturers face a 7-8 per cent cost disadvantage compared with global competitors because of higher taxes and levies, even as India targets a USD 350 billion textile sector by 2030.

Meanwhile, the Optical Fibre Cable report said India has built a production capacity of 100 million fibre-km, covering preform production, fibre drawing and cable assembly. However, the country continues to rely on imports of critical upstream inputs such as Germanium Tetrachloride, Silicon Tetrachloride, helium and UV resins. Given OFC's importance for BharatNet, 5G rollout, AI data centres, cloud infrastructure and defence communication networks, the report said securing these upstream materials is vital for India's digital sovereignty.

The reports recommend greater use of WTO-compliant anti-dumping measures where the Directorate General of Trade Remedies (DGTR) has established dumping and injury, stricter enforcement of Quality Control Orders, correction of inverted customs and GST duty structures, diversification of sourcing for critical upstream inputs and aligning public procurement more closely with domestic value addition under the Public Procurement (Preference to Make in India) framework. According to the authors, these measures would help build domestic capacity, reduce import dependence and strengthen India's position as a global manufacturing partner. (ANI)