We feel that in order to sustain industrial growth in Polyester segment to the existing

level of 10%, the duty on polyester products should be brought at par with cotton i.e. 4%.

It may be mentioned that Excise Duty of Polyester Yarn was increased to 10% in the last
budget. We expect that duty @ 4% would not only boost investment in polyester sector,
but will also contain pressure on ever rising demand of cotton fibre

GARMENTS / TEXTILES
Budget 2012: Duties on fibres should be brought down to 4%, says FICCI
20 Feb, 2012, 1835 hrs IST, Agencies
NEW DELHI: The Budget 2011-12 maintained the rate of excise duty on Polyester fibers
and yarns and its raw material Purified Terephthelic Acid. (PTA) and Mono Ethylene
Glycol (MEG) to 10 %. FICCI in its pre-budget memorandum has said that the industry
hopes it is not the intention of the government to increase the cost of fabric
predominantly used by the common man.

Since any increase in the production cost at the initial stage of fiber and yarn itself will
have a cascading and far reaching effect on the entire value chain, FICCI has requested
that this matter be re-visited and the duties on fibers along with their raw materials be
brought down to 4 % as before. Needless to mention this would benefit fiber
manufacturers and downstream users, texturisers and weavers.

FICCI has also given the following recommendations for the textile sector:

>> Parity in excise duty between Cotton and Polyester: The duty differential between
cotton and synthetics continues. Polyester today is the fabric of 'Aam Aadami' and it is
surprising, that cotton predominantly used by rich and affluent is being extended duty
concessions. Fiber neutral duty structure should be introduced and all the competing
fibers natural and manmade should be treated at par.

>> The amount lying in NCCD (now abolished ) head on account of NCCD levied on
Polyester Filament yarn comprising of Partially Oriented Yarn, Fully Drawn Yarn and
Draw Texturised Yarn were levied NCCD @1% w.e.f. 1/3/2003. The NCCD on Draw
Texturised Yarn was exempted w.e.f. 17/5/2003.The inputs of Draw Texturised Yarn
continued to suffer duty till 1/3/2008. This has resulted in accumulation of cenvat credit
which could not be adjusted as it could only be used for payment of NCCD Duty. The
accumulated credit of manufacturing units needs to be reimbursed back to the units who
have paid this, alternatively same to be credited to Basic Excise duty account of assesses
under excise rules.

>> The inverted duty structure in Customs Duty in the synthetic fibre value chain had
been corrected during 2001. However, the Custom Duty across different fibres is
different. To encourage investments across the value chain to make the industry
competitive, we propose a uniform cascading structure for all fibres / yarn value chains.
The Government may consider following customs duty structure for Polyester and Nylon
value chains:

a) Polyester Value Chain

Item Customs duty (%)

Tariff No. Present Proposal
PTA 2917.36 5 5
MEG 2905.31 5 5
Polyester chips 3907.91 5 7.5
Polyester staple fiber 5503.20 5 10
Polyester filament yarn 5 10
Polyester high tenacity yarn 5402.20 5 10
Polyester tyrecord fabric 5902.20 5 10

b) Nylon Value Chain

Item Customs duty (%)
Tariff No. Present Proposal
Caprolactam 2933.71 7.5 5
Nylon Chips 3908.10 7.5 7.5
Nylon filament yarn 5402.45 7.5 10
Nylon high tenacity Yarn 5402.10 7.5 10
Nylon tyrecord fabric 5902.10 10 10

Customs duty on Catalysts and Chemicals - Spin finish Oil & Titanium Dioxide and VP
latex used in the manufacture of synthetic fibres / technical textile fabrics should be on
par with raw materials. Custom duty structure for various inputs for manufacture of yarn /
fabrics should be on par with raw materials (These should include Chemicals, Catalysts,
VP latex etc i.e. at 5%).
4) Duty on Textiles: Ready-Made Garments and Made-up articles

Excise duty at the rate of 10% was levied by Budget-11 on ready-made garments and
made-up articles of textiles falling under Chapters 61, 62 and 63 (heading nos.63.01 to
63.08) of the Central Excise Tariff except those falling under heading nos.63.09 and
63.10 when they bear or are sold under a brand name. As for the valuation of these goods,
tariff value was fixed at 45% of the retail sale price in terms of notification No.20/2001
as amended .

The rate of excise duty applicable to ready-made garments and made-up articles of
textiles falling under Chapters 61, 62 and 63 (heading nos.63.01 to 63.08) of the Central
Excise Tariff except those falling under heading nos.63.09 and 63.10 when they bear or
are sold under a brand name has NOW been increased from 10% to 12%. (Not.18/2012-
Central Excise)

However, the tariff value for these items has been revised and shall now be equal Retail
Sale Price (RSP) less abatement of 70% instead of 55%. In other words, duty would be
payable on 30% of the RSP. ( Not.17/2012-Central Excise (N.T.)

The effect of the above amendment is that the effective rate of duty on Retail Sale Price
has come down from 4.64% to 3.71%. ( Refer example-1)