Textile mills in India want the duty structure on manmade fibers to be rationalised. They say this can propel the textile industry toward a higher growth rate. The convoluted duty structure in manmade fibers has for long been a major irritant in the development of textile sector. At present, while manmade fibers attract 12 per cent excise duty, cotton fibers attract none. Similarly, imports of some of the raw materials for producing manmade fibers are taxed heavily, while those of their finished products are taxed lower.

The industry has long been demanding a reduction in excise duty on manmade fibers, saying such a disparity is preventing domestic producers from scaling up operations. Consequently, India’s textile market continues to be cotton-driven. Such a situation hurts India’s export competitiveness in the manmade textile segment. While manmade fibers account for around 70 per cent of the world’s total fiber consumption, they make up for less than 30 per cent of domestic demand.

Moreover, raw materials such as purified terephthalic acid — used for making polyester staple fiber, filament yarn and film — attract a five per cent import duty. Recent initiatives like interest equalisation scheme, export incentives and duty drawback have helped the industry to improve export competitiveness and also increase its market share across the globe.