The government has allowed the National Handloom Development Corporation to import raw silk duty-free in order to mitigate the shortage faced by small and traditional weavers in the handloom and powerloom sector.
The department of revenue under the finance ministry has issued a notification allowing duty-free import of 2,500 metric tons of raw silk (of 3A and above grade) through the National Handloom Development Corporation against certification by the textiles ministry.
"The textiles ministry decided to intervene in order to augment supply of quality raw silk to the weavers at a stabilised price through duty-free import of raw silk of 3 A grade and above, while protecting the interests of cocoon producers and silk reelers in India," a textile ministry statement said.
India produces about 19,000 metric tons of raw silk against a total demand of approximate 29,000 metric tones. The deficit is met by imports, mainly from China, at basic custom duty of 30 per cent.
In spite of the increase in domestic production of raw silk in 2009-10, the demand-supply gap for raw silk in India, both in terms of quantity and quality, is expected to continue. This will remain so till full benefits of R&D efforts and extension work start showing up in significant increase in production, it said.
Currently, the supply chain of raw silk, particularly imports, on which a large number of weavers from non-silk growing states depend, is controlled by a few large traders who manipulate the prices in the market irrespective of global price, the ministry noted.
Global prices of raw silk have, meanwhile, witnessed significant volatility in the last one year putting a lot of strain on the weaving communities in traditional weaving centres such as Banaras, Kancheepuram etc, it added.
The textiles ministry is currently formulating procedural modalities for procurement and pricing of raw silk for distribution to handloom and powerloom weavers. The ministry is also looking at an appropriate pricing and monitoring mechanism to protect the interests of all stakeholders, including the cocoon rearers and silk yarn producers in India, the statement added.