27 Jan '25
(Fibre2Fashion News Desk (KUL): India has intensified efforts to curb the unchecked import of Chinese fabrics, particularly synthetic knitted fabric, following persistent demands from the domestic textile industry.
Despite the government’s imposition of a Minimum Import Price (MIP) on 13 HSN codes to control the surge in imports, the measure has proven ineffective as imports have continued to rise under non-MIP codes. In a significant crackdown, the Directorate of Revenue Intelligence (DRI) recently seized 100 containers of Chinese fabric at Mundra Port, estimating their total value at ₹200 crore.
Insights
India has intensified efforts to curb Chinese fabric imports following industry concerns over tax evasion.
The Directorate of Revenue Intelligence (DRI) seized 100 containers at Mundra Port, revealing large-scale misdeclaration to evade duties.
Textile associations estimate ₹85,000 crore in losses due to loopholes.
NITMA urges policy changes in Budget 2025-26 to regulate synthetic fabric imports.
The containers, which were falsely declared as carrying low-cost fabric, were found to contain high-quality textiles—an apparent attempt to evade import duties. The operation was launched after authorities received intelligence regarding the large-scale misdeclaration of imported goods.
Investigation uncovers large-scale tax evasion
Preliminary investigations suggest that the actual value of the seized fabric far exceeds the declared ₹25 crore. Similar shipments have also been intercepted at other major ports, including Mumbai’s Nhava Sheva Port (Jawaharlal Nehru Port), raising concerns over the scale of the fraudulent operation.
Following the seizure, the DRI has initiated a nationwide investigation to identify those responsible for the illegal imports and to trace the goods to their final destinations across India. Authorities are also working to expose the network of importers involved and to determine whether similar fraudulent practices are taking place at other ports.
Industry associations raise alarm over systemic misdeclaration
The Federation of Surat Textile Traders Association (FOSTTA) had previously lodged a complaint with the DRI, warning of systematic misdeclaration in textile imports. The association alleged that thousands of containers were being imported each month under incorrect classifications to evade the MIP. It further estimated that this widespread malpractice has resulted in a staggering revenue loss of ₹85,000 crore.
According to the trade body, importers have been exploiting loopholes by shifting imports from Chapter 60—where the MIP is imposed—to Chapter 59, which currently lacks such safeguards. The association specifically identified Mundra Port, Mundra SEZ, and Nandiambakkam SEZ (Chennai) as key entry points for these abusive imports, also naming importers allegedly engaged in these practices.
Calls for stronger government intervention
In response to the crisis, the Indian textile industry is now demanding that the government impose MIP across the entire Chapter 60 to curb imports effectively. The Northern India Textile Mills’ Association (NITMA) had previously appealed to Prime Minister Narendra Modi for urgent intervention, citing the severe impact of unchecked fabric imports on the domestic industry and the resulting financial losses to the government.
Ahead of the Union Budget 2025-26, NITMA has urged the government to introduce policy adjustments to restrict uncontrolled fabric imports. The association has specifically called for action against the under-invoicing of synthetic knitted fabrics under Chapter 60 and the misdeclaration of HS codes at Indian ports.
NITMA President Sidharth Khanna highlighted that several importers are circumventing regulations by declaring fabric at approximately $1 per kg, whereas the actual global price ranges between $4–6 per kg. He emphasised the urgent need for stricter regulatory measures to protect the Indian textile industry from further damage.
Outlook
With the DRI’s crackdown uncovering large-scale tax evasion and the textile industry pushing for policy reforms, the Indian government faces mounting pressure to address loopholes in import regulations. The coming months will be crucial in determining the effectiveness of these measures in protecting domestic manufacturers from unfair trade practices. (Source: Fibre2Fashion.com)