BAN HOSIERY IMPORTS FROM CHINA TO SUPPORT 12,000 MSME HOSIERY UNITS IN LUDHIANA
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Ludhiana known as Manchester of India has been a long standing hub for manufacturing of hosiery goods in India. Almost 90% of India’s winter wear is manufactured here. The city almost houses 12,000 plus hosiery units with directly/indirectly providing employment to 10,00,000 workers in the industry. Nearly all manufacturing units in this segment are MSME(Micro, Small & Medium Enterprises). The hosiery industry has been working in a challenging environment in the last 3-4 years. There has been major damage & further risk of injury to the industry from imports of hosiery goods from China. Till last year the Chinese imported readymade hosiery goods have almost taken 30% market share in the retail space & is increasing year on year. The industry produces goods worth almost 50,000 crores annually & is a big source of revenue to the Government under the MSME umbrella. Hosiery units directly also affect working of small scale industries producing packing material, buttons, accessories used in hosiery garments & large scale industries manufacturing yarn & fibre .
After Covid-19 hitting India, the industry is in a precarious situation. On one hand it faces a threat in fall in demand of almost 30% as its primary target market is lower & middle income groups in India during winter. This category of retail customers will be worst affected because of Covid-19 due to job losses & pay cuts.
On the other hand, there is increasing risk of even greater import of hosiery goods into India as Chinese manufacturers dump their productions. As a direct result of the pandemic, China has become less favorable source of manufacturing for Western countries & there is greater risk that manufacturers from China with surplus capacity will export even higher quantity to India & start distressed selling.
This will have a huge cascading effect on the hosiery industry in Ludhiana which could come to almost a halt. Most of the industrial units are small & un-organized, they neither have major financial muscle, have limited access to resources & do not have economies of scale advantage to leverage against the Chinese imports.
ACTION BY GOVT IN MARCH/APRIL 2020:
The Indian Government & MSME ministry has been very proactively discussing steps to be taken in aftermath of Covid-19 to support Micro, Small & Medium Enterprises. The Government is trying to take steps to increase availability of liquidity & finance for MSME’s through various monetary initiatives & favorable lending terms to these enterprises.
The Govt should ban import of Chinese hosiery goods into India with immediate effect in order to save upcoming winter season under HS codes 6101, 6102, 6103, 6104, 6105, 6106, 6107, 6108, 6109, 6110, 6111 & 6112 for a period upto December 2021. This will give the industry much needed breathing space & sustain in tough economic environment which will exist now.
This will promote ‘Make in India’ slogan & vision of our Prime Minister Sh. Narendra Modi ji, as the industry has spare installed capacity to scale up production once Chinese hoisery imports are banned. The complete chain in textiles from Fibre manufacturers to Yarn spinning mills, Hosiery sector & small vendors attached to garment sector will benefit from this step.
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