CVD on textile machinery may go

The government is mulling a proposal to waive countervailing duty (CVD) on import of technical textile machinery that is used to produce specialised items like optical and glass stable fibres.

A textile ministry official said, "The 16 per cent CVD on machinery increases its cost and has become a hurdle in setting up technical textile units in India. Therefore, imported machinery should be exempt from CVD."

It has been brought to the textile ministry's attention that as most machinery used for technical textile manufacturing is not produced in the country, units have to import them. Some kinds of technical textile machinery are already imported under a concessional Customs duty of 5 per cent.

More items are likely to be included under this head. "A comprehensive list of technical textile machinery should be covered under concessional customs duty," the official added.

The technical textiles industry, at a nascent stage, offers tremendous opportunities for joint ventures and foreign direct investment. "The segment-wise market size of technical textiles in India is estimated to attract investment to the tune of Rs 43,700 crore by 2010," the official said.

Under the existing Customs tariffs, fabrics, garments, and made-ups attract a specific rate of duty or advalorem duty, whichever is higher. A specific rate of duty is levied to protect the interests of the indigenous industry from cheap imports.

To protect the interests of the domestic technical textiles industry, the ministry has proposed to levy advalorem or a specific rate of duty, whichever is higher.

The official pointed out that specialised fibres and yarn such as aramide, chronic fibres, optical fibres, and glass staple fibre were not produced in the country.

The textile ministry has proposed to the finance ministry to permit import of these fibres at a concessional customs duty of 5 per cent and also exempt them from countervailing duty (CVD).

An expert committee on technical textiles has also recommended granting concessions on import of these fibres and yarn.