Synthetic fibre producers seek lower excise duty

Synthetic fibre producers have asked the Centre to "remove bias and anomalies" against the man-made fibre industry and bring down excise duty on par with cotton fibre and yarn for growth of the Indian textile sector.
India is the world's second largest producer of MMFs with presence of large plants having state-of-the art technology. MMF textiles constitute almost two-third of the domestic textile market. However, India's share in global exports of value-added textiles of MMFs is just about 3 per cent.
This has resulted in India's textile exports not growing beyond USD 40 billion out of which only 27 per cent come from MMFs. In contrast, China has given a big push to synthetic textiles and this has helped it become the world's largest textile exporter. Almost 80 per cent of China's textile exports consist of synthetics.

A major anomaly in excise duty structure is affecting growth of the Indian textile industry and preventing it from achieving a larger share of the global market, Association of Synthetic Fibre Industry (ASFI) said in a statement.
It is this bias against MMF and yarn that has left India far behind China in terms of investment, scale of manufacturing and exports, it added.
The excise duty imposed on man-made fibre and yarn in India is 12 per cent while cotton yarn and fibre are exempted from excise duty burden, leading to excessive bias against man-made fibres and yarn, it said.

"This affects the textile industry in two ways. In the domestic market, poor consumers suffer as the least expensive polyester shirt or a saree made of synthetic fibre is bought at Rs 100 or Rs 150 which suffers a huge excise duty burden of 12 per cent," ASFI Director General S C Kapoor said.
"In contrast, no excise duty is paid on cotton fibre and yarn used to produce expensive cotton shirts bought by rich consumers at prices ranging above Rs 1,000. Therefore, only the poor pay more tax on textiles in the domestic market while the rich are favoured with no excise duty on the premium cotton worn by them," he added.