Industry feels that the import duty on purified terepthalic acid (PTA), dimethyl terepthlate (DMT), and mono ethylene glycode will be hiked by at least 5 per cent from 25 per cent.

Capacity overhang in Asia has pulled down PTA/DMT and polyester prices by 50 per cent. Domestic manufacturers have not been able to realise reasonable margins since they are unable to compete with Asian market prices.

The industry's concern for a import-duty hike is understandable given that even behemoths like the Indian Petrochemical Corporation have fallen on bad days owing to a steep rise in imports from south-east Asia. The rise is partly owing to dumping, which has not subsided even after imposing anti-dumping duties on PTA/DMT imports from South East Asia. South Korean and Indonesian players are selling PTA/DMT in the range of $310-$390 in India. But the same products are sold at $450 in the European countries.

"We are pinning our hopes on the budget. If the budget goes against our expectations, that will be the last straw," said a Bombay Dyeing DMT division official. Bombay Dyeing, the sole producer of DMT, has reported a heavy squeeze in its profit margins during the third quarter due to lower price realisation in DMT.

Polyester-filament yarn and fibre-makers--users of PTA, DMT and MEG---also agree that the current import duty on fibre intermediates is too low to serve as a protective shield. They feel that there should be a 15 per cent differential between the intermediates and the end-products, and not the existing 5 per cent. The import duty on polyester-staple fibre and PFY is at 30 per cent, and the industry expects it to go up by another 5 per cent.

Even large players in the polyester industry like Indo Rama and Raymond have sustained huge losses. The budget will be a decisive factor in determining the future of the petrochemical industry.