In the rural sector, analysts highlight that more than 65 per cent of fabrics utilised are made from non-cotton yarn, typically polyester, nylon and their blends. In the previous budget, the excise duty on all man-made fibre and yarns had been reduced from 16 per cent to 8 per cent.
Given the need to make clothing cheaper for the common man and to bring parity between the domestic and imported supplies on fibre and yarns, these measures have been announced.
The Impact
For integrated players like Reliance Industries, which supply polyester filament, analysts are divided - some point out that it is neutral, while others point out that that RIL may need to cut prices by Rs 0.5 to Rs 1 per kg. Prices of polyester filament prior to the budget were at around Rs 70 per kg.
However, users of polyester filament and yarns like small unintegrated players are expected to benefit from this move.
