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'Government should provide furnace oil without any duties'
09
Jul '14
Industry experts proclaim that Indian government should exempt furnace oil from duties and taxes to improve profit margins in textile industry in the upcoming Union Budget, 2014-2015.

While speaking to Fibre2Fashion correspondent, Mary Christine Joy, Mr. Avinash Mayekar, Managing Director and CEO, Suvin Advisors Pvt. Ltd. said, "Indian government should provide furnace oil without any duties and taxes to the textile industry. It will improve profit margins of players in domestic market to safeguard them from current industrial turmoil."

On an explanatory note, Mr. Viren Malhotra, SME Scale-up Specialist states, "Furnace oil is used for captive power generation in textile industry. When the price of furnace oil goes up, the users (to prevent depletion in margins) switch to diesel - which is subsidized by oil companies - thus increasing oil company losses. This switch neither works for the users nor for the oil companies, and should be avoided."

Power costs are a major contributor to expenditure in the textile business, after raw material costs.  If the Indian Textile industry is eyeing on strong positioning in global textile trade, it has to reduce its power cost, according to Mr. Mayekar.

"In the short term, exempting duty on furnace oil is a good idea. However over the longer term, textile industry users should be encouraged to move to solar or a similar clean and renewable source of energy," Viren Malhotra concludes.

Fibre2Fashion News Desk - India

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