Industry calls for rationalisation of customs duty

Sanjay Sardana

New Delhi, Jan 4: The textiles industry has sought reduction in customs duty on capital goods to 5 per cent to encourage fresh investments in polyester industry. Capital goods currently command an import duty of 25 per cent.

The industry has further sought rationalisation of customs duty and the need for grading of duties, which reflect gradual rise from raw materials to the finished products. The industry further urged the need to reduce the customs duty on yarns and fibres and their raw materials to 10 per cent in line with customs duty on PTA/DMT/MEG. The current customs duty is 20 per cent.

In its pre-Budget memorandum submitted to the finance minister, the Association of Synthetic Fibre Industry (ASFI), ASFI has said that the additional excise duty burden of 15 per cent on textiles needs to be annulled.

ASFI represents four sectors of the synthetic fibre industry and includes the manufacturers of polyester filament yarn (PFY), polyester staple fibre (PSF), nylon filament yarn (NFY- textile grade) and nylon industrial yarn/nylon cord fabric (NIY & NTCF).

ASFI has said that although India and China have a lot of similarities, China has a blue-print for progress in place, and is now far ahead of India. Also, there is a need for India to learn from China’s strategy and catch-up with it, through fiscal and non-fiscal initiatives. In case of consumer textiles, additional excise duty in lieu of sales tax needs to be dispensed with, as all states would be adopting uniform sales tax rates from 2002. There is no excise duty at grey fabric stage. As such imported grey fabrics do not attract any countervailing duty (CVD). This does not give a level-playing field to the Indian fabric manufacturers particularly handlooms, powerlooms, knitting etc.

ASFI has argued that the import duty on capital goods in case of cotton textiles/viscose industry has already been brought down from 25 per cent to 5 per cent. Similarly, the import duty on capital goods for PFY/POY, PSF, NFY, nylon industrial yarn/nylon tyre cord fabric should also be brought down to 5 per cent.