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BL Research Bureau

The Union Finance Minister has announced a relief package for exporters that have been hurt by the appreciating rupee.

The most significant of the measures involves customs duty cuts on key raw materials used in the synthetic textile industry.

Customs duty on PSF (polyester staple fibre) and PFY (polyester filament yarn) is being cut from 7.5 per cent to 5 per cent and from 10 per cent to 5 per cent on other man-made fibres. Import duty on intermediates used in the making of these fibres has also been reduced.

The duty cuts should encourage domestic textile companies to resort to imports of raw materials and gain from the strengthening of the rupee.

Blended yarn manufacturers such as Sangam India, RSWM and Banswara Syntex stand to gain from the move, with PSF being a significant input.

The measure is also welcome at a time when the prices of these fibre intermediates are on the rise.

Low cotton yarn prices have placed a check on blended yarn realisations as well. The package will allow these companies to compete more effectively with cotton yarn players.

The Indian man-made fibre industry has been demanding a level playing field in the industry, where cotton has been dominating.

In recent budgets, customs duty on key intermediates has also been gradually reduced in line with demands.

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