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Indian Textile Imports

Volume 530: debated on Monday 12 July 1954

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Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. R. Thompson.]

2.8 a.m.

Despite the lateness of the hour, and the fact that hon. Members are somewhat fatigued, I wish to raise a matter which is of great moment, not only to my constituents, but, indeed, to the whole of Lancashire, and that is the immense increase in the number and quantity of textiles imported into this country from India. Indian textiles are admitted without quota, and virtually with tariff, and with a preferential advantage over indigenous textiles to the extent of something like 1s. per lb. on the price of their raw material. Last year, 1953, these imports amounted to about 15 million square yards, and in the year before, 1952, the figure was about eight million square yards. This year, they are running at the rate of something like 120 million square yards, an enormous increase and a total almost up to the level of the peak in the exceptional year of 1951.

It may be said that the textiles that are imported from India do not harm the United Kingdom production because they are largely of an inferior—or, at least, simple—quality, and a great many of them are finished here and are reexported. But there is no obligation to re-export, as there is with many overseas imports, and the present situation, by which the home production has its order books entirely full, is, I am well advised, not likely to last. The manufacturers' order books are at present full, but I have it on very good authority that the current rates of sale of domestically produced cloth are only about 50 per cent. of production capacity. The present condition of full order books, therefore, is not likely to last very long.

That is the position as regards imports into the United Kingdom from India. What is the reverse of the medal? India puts up a tariff, which has rapidly mounted and now, I believe, amounts to something like a 60 per cent, ad valorem duty against United Kingdom textiles seeking entry into the Indian market. Is there any tariff put up by any member of the Commonwealth against another member of the Commonwealth on any article which is as high as that? It seems to me a complete travesty and negation of Empire trade when one member of the Commonwealth can put up a 60 per cent. ad valorem duty against the products of another member.

Not only is there that enormous tariff, but there is a savage quota restriction. The result of these measures is that our already small exports to India have dwindled almost to vanishing point. In 1953 only 5 million square yards were admitted, as against 10 million in 1951 and 35 million square yards in 1948, a striking contrast to something like 1,000 million square yards that went annually to India before the war.

It would, obviously, be better, and I think Lancashire would accept this, if we had no tariffs or quotas either way; but what Lancashire is not prepared to accept is the worst of both worlds, by which India is entitled to impose—and, apparently, can get away with—these savage obstacles to our trade, while Lancashire is exposed to the full rigour of competition from a country whose wage rates are much lower than ours.

The excuse of the Indians, I assume, is that they have to protect their infant industries. These, of course, are not infant industries in any sense. It must be a very lusty infant if it can export these colossal quantities of goods into foreign and Empire markets, not only into the United Kingdom but into the African Continent in particular, and can make such headway there. It is not the sort of industry that needs protection on the normal basis of infant industries.

India's second excuse may be balance of payments difficulties. I should like my right hon. Friend the Minister to explain those balance of payments difficulties that entitle India to put up these quota restrictions against us. To what extent has India really restricted its dollar purchases of luxuries? To what extent has the expenditure of dollars on luxuries not been responsible for such balance of payments difficulties as India may have got into? And what about the sterling balances that India has in London still? To what extent do they not deny the balance of payments arguments that are raised?

Thirdly, in defence of the present situation we are told that, although this present situation may be very unfortunately deleterious for Lancashire, it is in some way to the general advantage of the United Kingdom. There again Lancashire is entitled to know in some detail what are these general advantages that the rest of the country or other industries get which the textile industry has to pay for, because that is what it amounts to. And although the textile industry is as broadminded as any other, it nevertheless cannot be expected indefinitely to take the rough, especially if these other advantages to other people have never been explicitly explained.

I shall be brief about this because I know that colleagues of mine who represent other Lancashire seats want to say a word, but we must support what the Cotton Board has advocated in the last few days. We hate to suggest reprisals, because this is an inter-Imperial matter which we like to keep within the family of the Empire, but requests and polite approaches to India have failed. Even representations at the highest level—which is what the Minister of State, Board of Trade, said had taken place in answer to a recent question of mine—do not seem to have produced the answer.

What the Cotton Board has recommended, to quote the last sentence of its telegram, is this:
"Having regard to the fact that this Indian competition has become effective largely by reason of artificial measures applied by the Indian Government it is considered imperative that the United Kingdom Government should forthwith apply import licensing to cotton goods from India and thereafter discuss with the Indian Government a long-term policy to give effect to true mutuality of interest."
Of course there is true mutuality of interest, and there must be, between India and this country, but it can only he mutuality on both sides, and merely by pointing it out to the Indian Government seems to get us nowhere. We have now got to use something more than appeals. We have got to use our bargaining power, and even though that means something of a reversal of our Commonwealth policy, I believe in the, end it will be to the advantage of the Commonwealth, because what is not to the advantage of the Commonwealth is that one member of the family should seek an advantage at the expense of another.

With that appeal I hope that my right hon. Friend will be able this morning to bring some light and encouragement to the people of Lancashire who are getting very worried at this flood of Indian goods, and are equally worried at the almost total blockage of their own markets in India.

2.20 a.m.

Those of us who have the honour to represent Lancashire constituencies know only too well the anxiety which exists throughout the textile area of Lancashire about growing imports of Indian cloth at the present time. My hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) has put the case very well, and I should just like to emphasise what we in Lancashire feel about this. We believe that India is at times taking advantage of her rather privileged position. Indian grey cloth is coming into this country in increasing quantities the size of which give Lancashire considerable cause for anxiety. There is no restriction on such cloth coming into this country, whereas the export of Lancashire cloth to India, as my hon. Friend has pointed out, is very restricted.

It is of the utmost importance that we should retain our spindles and looms manufacturing at full output. It is utterly wrong, we believe, that Indian cloths, subsidised by cheap raw cotton, should compete against us in this market. It is of equal, or possibly greater importance, that we should preserve the Colonial and Dominion markets to which we have exported such large quantities of textile goods in the past. Already we are feeling very keenly the competition of Indian textiles in, for example, East Africa, a market which we strove very hard to retain, and our Colonial and Dominion markets are diminishing only too rapidly. It is of the utmost importance that the Government should take a strong and firm line with India, to retain both our home and those Colonial and Dominion markets to which we have been traditionally attached.

2.22 a.m.

I am glad my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) has raised this subject, because I am aware that there is a good deal of concern about it in some quarters of the cotton industry. We have heard statements about the possibility of these imports of Indian grey cloth causing unemployment, and I should certainly be very anxious at any signs of a shortage of employment in Lancashire. But I suggest that it is important that we should get this matter in proper perspective. It is our duty to look at all the facts before we reach conclusions, and the facts as I know them do not appear to me to warrant the degree of alarm and despondency, which has been expressed by hon. Members.

Imports of grey cotton cloth into this country for further processing have been a fairly regular feature of Lancashire's trade since the war, and an important factor in our exports of finished cloth to Africa and elsewhere. Some sections of the cotton industry attach great importance to these imports and, as regards the effects on our export trade, I am inclined to think, rightly. Total imports of grey cloth this year do not seem to be abnormal compared with other years since the war.

At present, the total imports of grey cloth—and if we import more from one country we seem to import rather less from others—are probably running at about 170 million square yards. That is a considerable increase on last year, when it was something like 76 million, but last year reflected to some extent the 1952 recession. The figure for the current year is really not out of line with the 140 million square yards we imported in 1952, and I would like in that connection to take the figures for some of the earlier years, because it helps to get this matter into proper perspective.

The total imports for 1951 were 340 million square yards; 1950, 246 million; 1949, 309 million; 1948, 200 million, and 1947, 143 million. In those seven years the imports of grey cloth, mostly for re-export after processing, were between 140 million and 340 million square yards. In only one year—1953—did it fall below 100 million square yards. That is against a total production in this country of about 2,300 million square yards of cotton cloth.

I may be told that the circumstances have altered and that those were days of inflated demand, but allowing for that, on the facts I do not quite understand the extent of the alarm about the level of imports of grey cloth. My right hon. Friend received a telegram from the Cotton Board Standing Conference which urged the restriction of imports by quota and thereafter discussion with the Indian Government. There are one or two things I should like to say about that.

One of the basic principles of our commercial policy is that quantitative restrictions should be imposed only for balance of payments reasons. Another basic principle is that we should give free entry whenever possible, or preferential entry, to Commonwealth products. I should like to say very definitely that any departure from those principles would amount to a major alteration of policy which would have repercussions not confined to one commodity or one country.

I fancy that the motive behind the proposal which has been made to us in the telegram from the Cotton Board is, as has been suggested, that the Indian Government treat our own exports of cotton goods to India unreasonably. I have the greatest sympathy with that view. I believe that the present situation is unreasonable. It is unreasonable that India should accord us a quota of only 121 per cent. and should charge in addition duties varying between 60 and 80 per cent. ad valorem on most of the cotton goods which we send her while we give her imports into this country freedom from duty and quota restriction. I ought to make it clear that India gives us a substantial margin of preference.

In this respect we are treating India in the same liberal way as we treat imports from other Commonwealth countries, and that policy has been maintained in our trade with Commonwealth countries since 1932. It is justified by the preferences that our exports receive in Commonwealth markets and generally by the reasonable and friendly way that our trade is treated by other Commonwealth Governments.

I understand and sympathise with India's need to control imports and to use her foreign exchange on imports which will build up her resources. We do not ask India that because she enjoys free entry here we should necessarily enjoy free entry there, but I think we are entitled to ask India that in her import regulations she should pay regard to the importance of our cotton export trade to us and to understand that her cotton export trade is benefiting from the liberal treatment extended to it in the United Kingdom. She should also remember that while our cotton exports to India have shrunk away almost to nothing, her cotton cloth exports here are at present expanding rapidly.

We are most disappointed with the response that India has made to the representations which we have made to the Indian Government during the past year. I am not unhopeful still that the Indian Government will yet put this matter right. I saw the Acting High Commissioner for India today and urged on him to report to his Government our strong views on the matter and the unfortunate effects that this severe disparity is having. We are also asking our High Commission in Delhi to take the matter up again vigorously.

My hon. Friend mentioned the advantage that the Indian weaver receives through getting his raw material for a price lower than world prices. That is the effect of the price control now in force in India. We have to remember that the bulk of the Indian production is for domestic consumption, and the object of the price control is to ensure the availability of Indian cloth for the Indian population at the lowest possible prices. This price control does not discriminate between what is consumed at home and what is exported, and is not an export subsidy within the normal meaning of that term.

My hon. Friend also referred to the Indian balance of payments. Between 1949 and 1952 India suffered severe balance of payments difficulties. In 1953 she did earn a surplus, but any deterioration would be likely to put her in difficulties again. We can admit that India has grounds for imposing quota restrictions against that risk, but, as I have already said, I think it is unreasonable that she should impose severe quota restrictions against our cotton textiles and on top of that should add enormously high duties. I do not off hand know of any other case where there is this severe combination of quota restrictions and high duties.

I hope that this short debate has served to put this matter into perspective and to show that the Government are seriously concerned at the disparity between our treatment of India's cloth exports and her treatment of ours.

Question put, and agreed to.

Adjourned accordingly at Twenty-seven Minutes to Three o'Clock, a.m.