India will not be able to meet its textile export target of $50 billion by 2000 if the current duty structure is not changed, Indo Rama Synthetics (I) managing director O P Lohia said.
"The growth in the industry is being choked by the high duty structure," he added.
The existing excise duty on polyester filament yarn (PFY) is 36.8 per cent, while the duty on cotton yarn is 9.2 per cent.
At the same time, while the excise duty on polyester staple fibre (PSF) is 18.4 per cent, cotton fibre does not attract any excise duty.
"This duty regime is artificially favouring cotton at the cost of synthetic fibre," Lohia said.
To rectify the situation, Lohia has called for having the same excise duty of 16 per cent on PFY and cotton yarn.
"This is required to stop discrimination against synthetic fibre. The duty on PFY can be brought down gradually if not in one go," Lohia said.
The prevailing duty structure, he said, was hampering Indian textile exports as the export of synthetic fibre has not taken off.
"Still, almost 85 per cent of our textile exports is cotton, while the world over, the demand is equally distributed between cotton and synthetic fibre," Lohia added.
The high excise duty, Lohia said, was also holding up investments in the sector as the margins had become very slim.
"Low margins resulting from the artificially high excise duty is affecting growth in the business," he added.
According to him, while the per capita consumption of PSF in India is 0.55 kg, that in countries like Pakistan, China and Indonesia is over 2 kg.
The cut in the excise duty on PFY will, according to Lohia, result in a double digit growth for the industry as compared with the 8-10 per cent growth forecast for the current year.
So far, the government has declined to reduce the excise duty as it fears a loss of revenue.
"We have told the government that reducing the duty will lead to a rise in the consumption of PFY and will, in the long run, help raise more revenue," Lohia said.
Lohia also highlighted the issue of differential import duties on cotton textile machinery and synthetic textile machinery.
While the import duty on cotton textile machinery is five per cent, that on synthetic textile machinery is 25 per cent.
"This is again an anomaly. There should be no distinction between cotton textile machinery and synthetic textile machinery in the import duties," Lohia added.
