In order to boost domestic manufacturing and create better employment opportunities, the government is likely to hike import duty on around 300 textile products to 20 percent from the current level of 5-10 percent. The products which are expected to see an increase in import duties includes some fabrics, garments and man-made fibres. Foreign direct investment (FDI) norms for the sector may also be relaxed.
The Finance Ministry may soon issue a notification in this regard. If the government decides to notify the duty hikes, then it would have to be first tabled in Parliament. Increase in duties would give an edge to domestic manufacturers as the imported products are relatively cheaper. Increase in manufacturing activity will help create jobs in the sector, which employs about 105 million people.
Recently, the Central Board of indirect Taxes and Custom (CBIC) had doubled import duty on over 50 textile products to 20 percent to promot domestic manufacturing. It had also raised the ad-valorem rate of duty for certain items. The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.