According to the Indian Spinners Association (ISA), Chinese PSF cost Rs 74.46 per kg in July, compared with the Indian PSF's cost of Rs 84.42 per kg. "This difference of over 13 per cent results in uncompetitive prices of Indian polyster fibre in international market," said VK Ladia, president, ISA.
The cost of PSF has gone up in the past few months due to the rise in crude oil prices. However, domestic PSF manufacturers calculate the price on the basis of international prices, which include cost, and insurance and freight.
Such pricing by domestic PSF manufacturers adds 28 per cent to the freight-on-board price as special additional duty, countervailing duty, freight and other charges are added to the import parity price.
The ISA has asked the government to reduce excise duties on all man-made fibres from the present 8 per cent to 4 per cent.
"The abolition of the Customs duty will not have any impact on the government's revenues as imports of man-made fibres are negligible. However, this will not leave any scope for import parity costing by the Indian manufacturers that has resulted in higher prices of PSF in the domestic market," said Ladia.
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The domestic price of PSF has risen from around Rs 64 per kg in March to Rs 84 per kg in July.
The demand for Customs duty reduction from the ISA comes at a time when the government has announced abolition of 14 per cent import duty on cotton to check spiralling domestic raw cotton prices, which touched an all-time high this year. The government has also abolished the import duty on crude oil.