The Hindu Business Line : Duty on polyester, nylon fibres likely to be cut

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New Delhi Feb. 15 The Union Budget for 2007-08 is likely to initiate certain populist measures aimed at bringing down the cost of living for the masses. One of the proposed steps is to bring down the cost of man-made and blended fibres used for clothing.

It has been proposed by the Ministry of Chemicals and Petrochemicals that since a majority of the population uses polyester and nylon clothes, the basic excise duty on polyester and nylon fibres be reduced from the present 8 per cent to 4 per cent.

Cotton currently attracts 4 per cent excise duty with an optional CENVAT route.

The move, if accepted by the Finance Ministry, is likely to bring down the prices of non-cotton textiles that would have a direct impact on family expenditure, sources said.

In the household survey on textiles conducted by the Ministry of Textiles, it had been found that the share of man-made and blended textiles in the clothing sector is 57 per cent, followed by cotton garments at 41 per cent. Pure silk clothes account for 1 per cent and woollen garments for another 1 per cent of the country's total textile market.

Also, more than 65 per cent of the fabrics consumed in the rural sector is non-cotton fabrics made from polyester and nylon yarns and their blends. Similarly, in the urban sector, around 60 per cent of the fabrics consumed is mixed or blended fabrics.

Following the recommendations received from the Ministry of Chemicals and Petrochemicals and keeping the high demand for textiles, the Government is examining the revenue impact of the proposed duty reduction and is also considering making the CENVAT route optional for polyester and nylon yarns.

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