The Textile Ministry alongwith Industry bodies like the the Federation of Indian Chambers of Commerce and Industry, the Associated Chambers of Commerce and Industry, Confederation of Indian Textile Industry are of the view to halve the duty on man made fibre (MMF) to 8 percent to make it more profitable.
The Finance Ministry is looking at the pre-Budget proposals from the Textile Ministry demanding duty cuts on MMF.
Charging excise duty of 16 per cent on MMF and optional duty of 8 per cent has accumulated Cenvat credit of nearly Rs 100 crores with the spinners, making spinning of MMF unprofitable.
FICCI and ASSOCHAM have suggested reduction of excise duty on inputs and capital goods for spun yarn manufacture to 8 percent. The value addition in yarns is usually in the range of 35-40 percent over the input costs, thus there is an unutilised Cenvat credit of about Rs 4-6 per kg.
The excise duty on inputs and capital goods is 16 percent and 8 percent on finished textured yarn. The value addition in texturising is normally in the range of 12 percent resulting in an unutilised Cenvat credit of about Rs 1.50 per kg adding to the cost of production.
Industry feels that to reduce losses to the spinning mills by virtue of accumulated Cenvat credit, a duty cut on MMF will improve profit margins.
