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Twenty-eight major silk exporters have formed a group to watch and co-ordinate silk exports, especially silk fabric exports to India.

The companies also issued a statement, appealing to companies in the industry to stop bad practices in the export business.

The group was set up voluntarily by export companies after a national conference on silk exports held in Chengdu, the capital city of Southwest China's Sichuan Province, earlier this month, according to an official from the Silk Branch of the Chinese Chamber of Commerce for Textile Import & Export.

A major concern behind the co-ordinating group is that India, a key silk export destination, is contemplating beginning anti-dumping investigations into China's silk fabric exports, said the official, who declined to be named.

China's silk fabric exports totalled 182 million metres from January to November last year, with a value of US$368 million. Among them, 81.4 million metres, valued at US$135 million, were exported to India. The volume and value to India rose by 42.45 per cent and 75.2 per cent respectively.

The country now has 193 silk exporters and 68 of them have silk export business with India.

The 28 companies attending the group account for 69 and 79 per cent of the total silk exports to the world and India respectively.

The first task for the group is to stop the behaviour of issuing lower-valued invoices to Indian importers, which enable them to avoid paying tax, the official said.

The Indian silk fabric manufacturers had many complaints about the illegal behaviours of Chinese companies which were favoured by Indian importers. These manufacturers, who also have concerns about China's low prices, are appealing to the Indian Government to impose anti-dumping duties on Chinese silk fabric.

The Indian Commerce Ministry has set a base price of US$27.98 per kilogram for Chinese imports of mulberry raw silk of 2A grade and below since July 2003. It made the decision because Chinese companies were ruled to be dumping. The anti-dumping duty, unless reviewed, will last for five years.

The anti-dumping duty paid off and successfully blocked Chinese imports. As a result, Chinese companies increased other silk exports to India, such as silk fabric and the prices became lower and lower in the competition.

The Indian manufacturers claimed Chinese silk fabric is being dumped in the country at around US$1-1.5 per metre, half the price at which Indian silks sell.

As India refuses to grant China market economy status, an item used in judging anti-dumping cases, the possibility for Chinese companies of winning is slim, the official said. And lower-valued invoices were further evidence against Chinese silk fabric exporters.

The 28 companies, including some big names such as Cathaya and Soho, said they will take more steps to address the problems.

While doing so, they also asked the chamber to visit India and lobby local manufacturers, the official said.

The quota-lifting has created more business opportunities for the industry, the official said, but the 28 companies recognize that it is a big question for them to ensure good business order.

The co-ordination group will be a useful organization to solve increasing problems in China's textile trade, which may face growing friction in the quota-free period, the official said.

Another six co-ordination groups formed by about 50 major textile exporters were up last month to police export orders through self-discipline.

The six panels oversee six categories of textiles: Knitted shirts, non-knitted shirts, trousers, underwear, cotton sheets and socks. The six categories were chosen as they are the areas the United States is considering safeguarding for fears the domestic market could be hurt.