Synthetic rayon exporters seek changes in excise duty

Updated: Jan 26 2002, 05:30am hrs
In the wake of World Trade Organisation (WTO) regime by year 2005, local synthetic rayon and textile exporters are hoping for drastic changes in excise and import duties in the coming month’s Union Budget. These, they feel that, will help them increase international competitiveness and widen market share.

Further, rationalization of excise duty on cotton, synthetic yarns and need for imposition of duty at grey fabric stage to make the chain complete are a few of the significant recommendations made by the council.

In its pre-budget agenda, The Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) said there is a urgent need for rationlization of excise duty on cotton and synthetic yarns. Both cotton and blended yarns are manufactured on cotton ring spinning system. Therefore, all yarns whether cotton or blended, which spun on the same system should have the same rate of duty.

SRTEPC wants excise duty on partially oriented yarn (POY) and draw textured yarn (DTY) to be reduced to 8 per cent. Currently, POY and DTY have the highest duty of 36.8 per cent, as compared to cotton yarns at 9.2 per cent and blended yarn at 18.4 per cent. While speaking to The Financial Express, SRTEPC president Sanjive Saran said: "This rationalisation of the duty should be done as early as possible for increasing the export. Due to anomaly of excise duty on cotton and synthetic yarns, there is a lot of misconception to compare excise duty on blended yarn after modvat with that of cotton yarn." SRTEPC also wants, ‘unfair’ provision available under the Exim Policy for payment of excise duty to the export oriented units (EoU) and free trade zone (FTZ) in domestic tariff area to be removed. Under the said provision of Exim Policy, 100 per cent EOUs procure raw material indigenously at international price and sell them in domestic tariff area by simply paying applicable excise duty only. Domestic manufacturers have been unduly suffering as against 100 per cent EOU/FTZ units due to this anomalous situation which need to be plugged by suitably restricting domestic procurement of raw material. "This will ensure the much-required level-playing ground to the local players," Mr Saran said. India’s share in synthetic and rayon textile exports in the global trade is still insignificant. In the last few years, aggressive competitive strategies adopted by countries like China, South Korea, Taiwan, etc, were detrimental to the growth of Indian exports.

Local exports of synthetic and rayon textiles during the first six months of the current financial year (April-September 2001) had shown a marginal decline of one per cent, amounting to Rs 2,456.74 crore as against Rs 2,567.28 crore in the corresponding period of the last year. Mr Saran said: "Internationally, Indian exporters are facing tough competition due to higher costs and due to this, there is a marginal decline in exports in the first half of the current year. But exporters are looking for newer markets which can help boost exports and tap major sub-Saharan regions for growth in the second half of the current fiscal."