Duty Cuts Required

The awareness that the synthetic industry is as important as cotton has come at a time when the industry itself is trying to cope with the full exposure to global market forces, according to the pre-budgetary memorandum submitted by the Association of Synthetic Fibre Industry (ASFI).

If that is not enough, the petrochemical business cycle has just started on its downward swing. When the industry was reeling under the impact of spiralling raw material prices, repeated appeals to reduce the import tariff were not heard by the government. And now, the tariff cuts have come when the business cycle is on a downward move, and the international prices have crashed. ASFI says that the uncorrected factor cost differentials in India have started converting the low protection offered by the previous budget into negative protection.

 

In the face of all these problems, ASFI has summarised the following changes that would be welcome in the coming budget: Stop cutting import duty and taking excise duty reforms further so that proper and full modvatting is possible. For excise duty, the proposals are to reduce duties in polyester staple fibre (PSF) from 20% to 15%, for polyester filament yarn (PFY) from 40% to 20%, for nylon filament yarn (NFY) from 30% to 15%, for nylon tyre cord yarn (NTCY) from 30% to 15%, for blended yarn from 20% to 10%, and increase duty for cotton yarn from 5% to 7.5%.

ASFI feels that increasing the duty on cotton yarn will have no adverse impact, and in fact, the five per cent charged on cotton/viscose yarn and 20 per cent charged on cotton/polyester yarn can be removed. The duty exemption given to PFY