Govt halves excise on textile intermediates

Acrylic fibre producers such as Consolidated Fibres, India Acrylic and Pasupati Acrylon would gain, as the duty on their raw material acrilonitrile has been cut from 16 to 8.

In Budget 2006-07, duty on manmade fibres and filament yarns was reduced from 16 to 8. But the duty on intermediates were kept unchanged at 16. This had created inverted duty structure and accumulation of unusable Cenvat credit with independent PSF and PFY producers, who buy the intermediates from largest manufacturer, Reliance Industries, Indian Oil and Mitsubishi.

8216;8216;We would have lost Rs 80-100 crore in a year due to unutilised credit. We welcome the decision to correct the anomaly,8217;8217; said OP Lohia, managing director, IndoRama.

Since Reliance producers PSF and POY on its own and has multiple product lines, it was not facing the problem of unutilised credit. Reliance Hazira plant is an integrated facility for polyester making. The consumers of manmade fibres could benefit through price reductions, if the companies decide to pass on the benefit.

8216;8216;The government should have reduced the customs duty on PTA also. The inverted duty structure exists there also, with the customs duty differential between PTA and the PX being 8,8217;8217; said DK Nair of Confederation of Indian Textile Industry.