'Import duty hike on raw silk to hit exports badly'
New Delhi, Feb 28 : Indian silk exporters Thursday expressed concern at Finance Minister P.Chidambaram's proposal to increase duty on imported raw silk, fearing that it would further hit exports of silk fabrics as they heavily rely on cheap and high-quality imported raw silk from China.
In order to give a measure of protection to domestic sericulture, Chidambaram in his budget speech proposed to increase the duty on raw silk from 5 percent to 15 percent.
"It could help a little bit domestic raw silk producers as they will now get a better price realisation. But the measure would hit the country's silk fabric exporters very badly. Chinese raw silk yarn would become expensive due to the hike in custom duty," Silk Association of India president Vikram Tantia told IANS.
"Till now we are very much dependent on raw silk yarn imported from China as the domestic raw silk does not have the same quality," Tantia said.
According to him, the duty hike of 10 percent would increase the production cost of finished silk fabrics by the same proportion and it would make India's exports more "uncompetitive" compared to China's in the overseas markets.
Indian silk product exports have already been facing a major slowdown with the economic downturn in the US and Europe.
"This will give a further setback," Tantia said.
"This budget is hopeless. The hike in duty on raw silk yarn imports will have a huge negative impact on the country's exports of finished silk products to the international markets," said Arun Kumar Agarwal of the Indo-American Chamber of Commerce.