The Textiles Ministry today said it will soon seek Cabinet clearance for a National Fibre Policy, which is aimed at ending the tax disparity between cotton and man-made (synthetic) fibre.
"Draft Fibre Policy has been prepared after consultation with all stakeholders and the Ministry would be seeking Cabinet approval in the coming months," the ministry said.
In its draft policy, which has been in the public domain since June, the ministry had expressed concerns over the "historical discrimination" of man-made fibres and textiles vis-a-vis cotton and cotton textiles in the form of higher excise duties.
The draft said although there has been a substantial reduction in excise duties on man-made fibres (MMF), the levies are still high.
While cotton is exempted from excise duty, MMF attracts excise duty of 8 per cent.
Any reduction in excise duties on MMF and MMF textiles will have a highly positive impact on the growth of MMF consumption, the draft argued.
"Given that the future demand is expected to be largely in favour of man-made, fibre-based textiles, special attention is required to boost the consumption and production of man-made fibres in India," it said.
At present, man-made fibres account for 41 per cent of domestic fibre consumption, while cotton is used in 51 per cent of the country's textiles production. In comparison, the ratio of man-made fibres to cotton consumption globally is 60:40, the paper said.
It stated that the global fibre consumption trend is likely to further tilt in favour of man-made fibres on account of limitations in the growth of cotton production worldwide due to limited availability of land for cultivation.
