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India emerges top importer of used clothes -Namrata Acharya
-Business Standard

Garment industry apprehends the govt to issue close to 200 new licenecs for import of wearable used clothes

Kolkata: Even as premium global fashion brands see India as a potential market, another segment in the Indian retail chain is attracting global attention: The country has emerged as the biggest importer of worn clothing and textiles.

UN Comtrade data on global trade of worn clothes and textiles show in 2013, such imports by India were worth $182 million, 4.3 per cent of the overall global imports of $4,179 million, making India the top importer of used clothes. Russia and Pakistan were second, accounting for 3.9 per cent of global imports each.

The US, the UK and Germany were the top three exporters.

In 2012, India surpassed Russia as the largest importer of used clothing, with imports worth $173 million. India had topped the list in 2009 and 2003, too, UN Comtrade data show. Between 2010 and 2013, the import of used clothes and textiles increased about 200 per cent.

Largely, the used clothes segment in India is envisioned as serving the cause of charity, especially in African countries. In fact, Panipat in Haryana is one of the largest suppliers of blankets made from second-hand textile for charity across the globe. The demand for low-cost blankets and high-street fashion brands from the West at throwaway prices is, however, no less in the domestic market.

Used clothes are imported into India under two categories — wearable and mutilated. The import of wearable clothes requires a licence from the government, with the condition of 100 per cent re-export. This segment accounts for about 30 per cent of the imports. The government’s approval isn’t required to import mutilated clothes, which account for about 60 per cent of worn clothing imports. Yarn extracted from mutilated rags and woollens is used to make blankets, sold at about Rs 80-100 each in the open market.

Used wearable clothes enter the Indian retail market through two channels: First, smuggling from special economic zones (SEZs).

Domestic apparel manufacturers say as much as 30 per cent of the imports into the SEZs are smuggled into the domestic market.

The second channel is payment of a paltry penalty of Rs 50 a kg at custom checkpoints. By comparison, new imported garments attract an import duty of 15 per cent.

Rahul Mehta, president of the Clothing Manufacturers Association of India, says the government is considering increasing against the number of licences for the import of wearable used clothes from 22 (20 in the Kandla SEZ and two in Falta) to 200. The move could flood the domestic market with used clothes from the West.

In a recent letter to the Union textiles ministry, the association had written, “We understand a meeting was held on July 4, 2015, in the commerce ministry, wherein a decision has been taken to liberalise the import of un-mutilated worn and used clothes by releasing about 200 licences in all SEZs in India. The issuance of fresh licences will substantially hurt the domestic textile and apparel sector.”

The association estimates as many as 57.6 million garments enter the retail market every year through each licensee, for resale through illegal channels from SEZs.

In September 2014, the government had allowed up to 15 per cent of the used wearable clothes export surplus to be used in the domestic market. This was, however, rolled back in January this year.

In a research paper titled ‘The limits of ethicality in international markets: Imported second-hand clothing in India’, Lucy Norris, a researcher in the department of anthropology, University College London, writes Panipat is home to the world’s largest shoddy wool sector, supplying low-quality blankets to the poor across India, South Asia and East Africa.