Following closure of 10 units of polyester filament yarn industry, the Filament Yarn Manufacturers Association has urged the government to reduce custom duty on polyester chips from 20 percent to 15 percent.
Duty on polyester filament yarn was reduced from 25 percent to 20 percent on 4.12.2002 abruptly.
The reduction of duty did not serve the cause of power loom sector as the entire imports of yarn is in the hands of a few commercial importers who sell this item to the end users, that is power loom sector, at their own prices. Thus power loom sector, for which duty was reduced did not benefit.
On the contrary, local polyester filament yarn industry, particularly the units producing polyester filament yarn from polyester chips were badly hurt as their raw material, polyester chips and end product polyester filament yarn have been placed at the same rate of Custom duty of 20 percent.
These units have been placed in a situation by way of withdrawing tariff protection that they cannot compete with other sector of industry comprising two units only and producing same product that is PFY whose raw materials, PTA and MEG, still enjoy tariff protection subjected to rate of duty at 15 percent and 10 percent respectively, as well as the imports of PFY at highly low prices increased from 5000 tons in the year 1998-1999 to unprecedented high 40,000 tons in 2002-2003 which trend still continues.
As a result of reduction of duty on PFY, as often reported in the press, out of 17 units with the total capacity of 46,000 tons starting production from polyester chips as raw material, 10 units with a capacity of 23,000 tons have so far closed down rendering thousands of workers jobless while remaining units are partially operating in the hope of immediate tariff relief from the government by way of reduction in duty from 20 percent to 15 percent on polyester chips and restoration of duty on PFV from 20 percent to 25 percent.
Such measures will provide level playing field for the whole of local PFY Industry to face the existing challenges of globalisation of trade and provide an opportunity for the revival of closed capacity of PFY units to the extent of 23,000 tons out of total capacity of 1,10,000 tons available in the country.
The matter, therefore, needs immediate attention of the government as it is very much feared in case such a position remains any more, the polyester chips based units will continue to be closed down one after an other--irreparable loss to entrepreneurs, financial institutions, government revenue and huge unemployment which the government can ill afford.
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