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India's MMF industry demands fibre neutral excise policy
14
Nov '14
The man-made fibre (MMF) industry in India has demanded that the Union Government implement a fibre neutral excise policy and remove bias and anomalies against the MMF industry.
 
The MMG producers, represented by the Association of Synthetic Fibre Industry (ASFI) have urged the Indian Government to bring down the current excise duty of 12 per cent and equal to that levied on the cotton fibre and yarn for enabling the Indian textile industry to achieve a greater share in the global market.
 
India is the second largest producer of synthetic fibres in the world with presence of presence of large plants having state-of-the-art technology. Although MMF textiles constitute almost two-third of the domestic textile market, India’s share in global exports of value-added MMF textiles is miniscule at around 3 per cent.
 
At present, only 27 per cent of India’s total textile exports of US$ 39 billion are made from MMF. In comparison, nearly 80 per cent of China’s textile exports are made of synthetics.
 
Asian competitors like Sri Lanka, China, Indonesia, Thailand and Pakistan levy uniform duty of 20 per cent, 17 per cent, 10 per cent, 7 per cent, and zero per cent, on both cotton and synthetic fibre and yarn.
 
Bangladesh does not levy any duty on cotton and synthetic fibres, but it levies a duty of Tk 1.5 per kg on both cotton and synthetic yarn. In comparison, India collects a duty of 12 percent on synthetic fibre and yarn, while there is no duty on cotton fibre and yarn.
 
The bias against man-made fibre and yarn has left India far behind China in terms of investment, scale of manufacturing and exports, feels ASFI.
 
In letters submitted to the ministries of finance, textiles and commerce & industry prior to the Union Budget 2015, ASFI said the high excise duty on man-made fibre and yarn has become a roadblock for the growth of the textile industry.
 
Explaining how the 12 per cent excise duty on man-made fibre and yarn affects the textile industry, SC Kapoor, director general, ASFI, says, “In the domestic market, poor consumers suffer as the least expensive polyester shirt or a saree made of synthetic fibre which can be bought at Rs 150 attracts a huge excise duty burden of 12 per cent. In contract, no excise duty is paid on the 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.”
 

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