Explaining how this racket is being operated, sources point out that there are more than 2,000 texturising units in the country. Of them, about 40-60 may be export-oriented units (EOU) engaged in texturising of POY. This apart, there are also EOUs engaged in the activities of twisting, weaving, processing and garment making.

Some of these units act in concert to push through such rackets. There is hardly any worthwhile check on their manufacturing capacities and the quantum of imports being made by them apparently for export purposes. Much of the imported material instead of being used to promote exports, is thus being utilised to feed the domestic market.

This is how some of the EOUs in this group operate. A unitengaged in the manufacture and export of texturised polyester yarn would import a substantial quantity of POY, apparently for export purposes. To begin with the material may be under-invoiced at just $0.50-0.65 per kg in order to bring down export obligations.

The unit concerned is allowed to sell half of its production in the DTA by paying just half of the customs duty, apart from CVD. The remaining half of production may be diverted to another EOU which is engaged in the activity of twisting of such yarn. The latter may sell half of its production in the domestic market and the balance to another EOU engaged in weaving. Even in this case, the weaver may sell half of his production in the domestic market and the balance to another EOU unit engaged the processing of fabrics.

The latter may also dispose of half of its production in the domestic market and sell the rest to yet another EOU engaged in the manufacture of garments.

The latter may also sell half of its production in the domestic market andexport the balance. Only a small quantity of the material originally imported for export purposes, finds its way into the export markets. There is hardly any check on whether the importer has capacity to utilise the material being imported by him and how much production based on such imports is ultimately exported. Even the excise and customs departments are said to be indifferent to this.

There is no exercise to find out how much imports are taking place and what are the exports based on these imports.

A large number of texturising units are, however, not EOUs. They are currently neck-deep in trouble. In view of the recent hike in POY prices by domestic producers their conversion margins have been squeezed to unremunerative levels. A number of such units have closed down and are unlikely to resume production unless their conversion margin improve.

This can happen only if prices for texturised yarn go up or those for POY come down. Texturisers feel that their raw material may become cheaper.

Theirhopes are based on two factors. Firstly, stocks of POY available with the producers, according to them, are increasing. Secondly the overseas markets for polyester which had flared up earlier, appear to be somewhat cooling down. For instance, foreign suppliers have reduced their quotations for PSF to about $0.78-0.82 from the earlier high of about $0.88 per kg. POY 120D is being quoted by them around $0.94-0.95, against, $1.05 to 1.13 per kg previously.