The Hindu Business Line : `Bias will harm man-made fibre players post-MFA'

THE Government's protracted "discrimination" against man-made fibre textile players could lead to India losing out on its global textile market share in the post-MFA (Multi-Fibre Agreement) era, according to man-made fibre producers.

"Man-made fibre accounts for over 55 per cent of global textile trade. As against this, only 15-20 per cent of our textile exports are currently in the form of man-made fibres. Continued tax disincentives against man-made fibre manufacturers could result in Indian exporters missing the bus when the quota regime goes from January 1 next year," said the Managing Director of Indo Rama Synthetics, Mr O.P. Lohia.

Reacting to the changes in the tax structure announced in this Budget, Mr Lohia stressed the need for a consistent fiscal policy in order to attract investment.

"It needs to be spelt out whether the Government will continue with the bias towards natural fibres at the expense of man made fibre producers," said Mr Lohia, who also heads the FICCI Committee on the textiles sector.

Commenting on the Budget proposals, Mr Lohia said: "The abolition of Cenvat was expected because of the common minimum programme pressure from the Government.

"Even as the excise duty on certain fibres like cotton has been brought down from eight per cent to four per cent, the filament yarn tax has been retained at 24 per cent, despite the promise of bringing down the excise duty. The gap, therefore, between the natural and the man-made fibre has increased six times."

According to him, the increased excise duty incidence on man-made fibres and polyester filament yarns would have a big negative impact on prices, making Indian goods uncompetitive in the world market.

He said that while the N.K. Singh Committee had suggested a uniform duty of eight per cent on the textile industry for a five-year period, the Kelkar Committee had recommended bringing taxes to the extent of 16 per cent in two years.

"The measures taken in the Budget do not address the level playing field sought by industry players, but only distort the tax bias further," Mr Lohia said.