The government’s decision to abolish anti-dumping duties on a raw material for synthetic fibre-based clothing and certain plastic-based products will bring down their manufacturing cost and potentially boost exports, say manufacturers. The move, announced “in public interest” in the Budget Saturday, does away with a previous NDA government decision to block countries like China, Taiwan, Malaysia, Indonesia, Iran, Korea and Thailand from substantially exporting the material — purified terephthalic acid (PTA) — to India.
It also follows “persistent” demand “for quite some time” from several industries to allow them to source the product at a more affordable rate.
“That particular product (PTA) is a raw material for many industries. There has been persistent demand that they should be allowed to source that particular product at an affordable rate, even if it means importing it,” said Sitharaman.
“We had a look at it, many had been waiting for it (to be removed). We thought at this time that when many industries are dependent on imported raw materials that we are allowing so many others to come in, why not allow this,” she said. The minister had said in her Budget speech that easy availability of this “critical input” at “competitive” prices was desirable to unlock “immense” potential in the textile sector, seen as a “significant” employment generator.
Focus on exports, competitiveness
The removal of the anti-dumpting duty would greatly help the country to enhance the global competitiveness, boost exports and also enable the domestic manufacturers to compete with the cheaper imports.
The move may cut prices of PTA by as much as $30 per metric tonne of the product, according to RK Vij, general secretary of the PTA Users Association.
“We have been fighting for the last four-and-a-half years (to abolish the anti-dumping duty),” he told The Indian Express. The duties had led to downstream manufacturers of synthetic fabrics operating at only 70 per cent of their actual capacity, he said.
While India has a few domestic PTA producers like Reliance Industries and the Indian Oil Corporation, synthetic fabric makers have faced shortages of PTA on several occasions, Vij argued.
“Exports of these downstream products have dropped and, in some cases, their imports have risen as it is cheaper to procure them from outside India,” he said.
The anti-dumping duties, first imposed around July 2014, levied additional charges between $27 to $160 per metric tonne for those wishing to import PTA, according to the Southern India Mills’ Association. Data from the Commerce Ministry shows exports of some products made with PTA like polyester staple fibres (used to make synthetic yarn) dropped over 35 per cent to $197 million in 2015-16 from $309 million in 2013-14. In 2018-19, India exported $320 million worth of this product. Exports of textured yarn of polyesters dropped 19 per cent to around $680 million in 2015-16 from around $842 million 2013-14, before growing to around $832 million last financial year.
“This (removal of the anti-dumpting duty) would greatly help the country to enhance global competitiveness, boost exports and enable domestic manufacturers to compete with cheaper imports,” said Ashwin Chandran, chairman of SIMA, Coimbatore.
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