The Southern India Mills’ Association (SIMA) chairman Ashwin Chandran has appealed to the Union Ministers for Finance, Commerce and Textiles to remove the anti-dumping duty levied on viscose staple fibre that has been in existence for the past 10 years.
In a release, he said that that VSF is produced by a single manufacturer in the country and they monopolize the customers with their pricing policy.
MSME spinners who don’t have the negotiation power with the monopoly supplier suffer the most and thereby the powerloom fabric exports become uncompetitive and affected.
He has also pointed out that there are several polyester fibre producers in India and the spinners are able to get competitive prices unlike VSF. Highlighting the growing demand for Viscose fibre in India, he has pointed out that the current capacity of the domestic producer is not enough to meet the growing demands of the industry and hence the indigenous producer is adopting import parity pricing while selling the fibre to domestic spinners at a premium of Rs.20/Kg taking advantage of ADD.
He pointed out that the MSME segment, especially the powerloom segment is not able to gain advantage of the indigenous fibre.
He has added that the Competition Commission of India in its order dated 16th March 2020, case No.62/2016 levied Grasim Industries Limited a penalty of Rs.301.61 crores for abuse of dominant position in the market for supply of viscose staple fibre (VSF) to spinners in India and Grasim was found to be charging discriminatory prices to its customers, besides being found to be imposing supplementary obligations upon them.
The domestic fibre manufacturer adopts a highly complicated domestic pricing policy.
They promise discounts to the tune of 40% while withholding over 1/3rd of it till the year end leading to the blockage of the working capital.
They link the discount to the incremental fibre consumption with a one-sided penalty clause and prevent sourcing from other suppliers with an annual contract.
Removing the ADD on VSF will make the domestic VSF prices aligned with Global VSF Prices making the entire Indian VSF textile value chain globally competitive and boost production and exports of these products.