New Delhi, Jul 17 (UNI) Indian spinning industry today urged the Government to immediately abolish import duties and reduce excise duties on raw materials of the blended and synthetic yarns as done in the case of scrapping import duty on cotton.
The industry demands scrapping of import duty and reduction in excise duty from eight to four per cent to bail out more than 200 spinning mills.
Addressing reporters at a press conference here, Indian Spinners' Association (ISA) President V K Ladia said the situation is very critical and unless immediate relief is provided by the Government, the prospect of immediate closure is staring in the face of the industry, which will leave about one million people jobless.
He made it clear that the blended and synthetic yarn industry is squeezed between galloping input costs and uneconomic prices of their output.
The devastation of the industry is taking place as raw material prices have gone through the roof as the domestic price of polyester staple fibre (PSF) at the mill gate has surged from Rs 63.86 per kg on March 1, 2008 to Rs 84.13 per kg on July 1, 2008.
Mr Ladia further informed that there are about 200 mills manufacturing blended and synthetic yarn. In 2007-08, out of the total spun yarn production in the country, which was 3990 million kg, the share of blended and synthetic yarn was 1309 million kg, accounting for 26 per cent, which is little more than a quarter of the textile industry in the country.
''If such a big segment of the industry is in dire financial straits, it will not be possible for the textile industry to achieve the target of creating additional 17.4 million jobs by 2012,'' ISA President observed.
Mr Ladia also referred to pprofitability results of five leading man-made spinning and weaving industries and said there has been practically total erosion of net profits in 2007-08 with mills reporting a decline in profits by 80 to 99 per cent. The downslide has further accelerated since April-June 2008 further reporting heavy cash losses.
Prices of PSF have, no doubt, influenced by skyrocketing of crude oil prices. However, because of peculiar method of domestic producers to fix price on import parity basis, which gives additional price boost of 28 per cent of FOB price due to the impact of import duty, SAD, CVD, freight and other charges, the domestic price of PSF works out much higher than in other competing countries such as China where the PSF prices are lower by at least Rs 10 per kg, pushing Indian players at great disadvantage, he added.
Mr Ladia reminded that last month, Government had totally abolished import duty on crude oil. Since the downstream industries were unable to absorb the tremendous shock of high crude oil prices, inasmuch as their inputs are crude oil-based, it is necessary to waive import duties on all downstream industries and particularly on PSF.
Recently, import duty on cotton has been abolished and hence, abolition of import duty on man-made fibres (MMF) is imperative for the point of parity.
Mr Ladia also said the abolition of customs duty will save the blended yarn spinning industry in the country.
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