End consumer likely to be affected over duty on PTA as synthetic fabrics getting costly

With the central government imposing anti-dumping duty last week on the import of purified teraphthalic acid (PTA), a raw material for the production of polyester chips which in turn are used to manufacture polyester filament yarn, polyester staple fibre and polyester film. The levy of anti-dumping duty will lead to increase in the prices of polyester yarn and subsequent rise in the prices of synthetic fabrics like saris and dress material. The prices of synthetic fabrics are set to increase by nearly 15 percent.

According to industry sources, the anti-dumping duty will rein in production of downstream products such as polyester filament yarn, polyester staple fibre and synthetic textiles. Surat the country’s biggest man-made fabric (MMF) hub which produces around 3 crore metres of fabric every day, contributes to 40 percent of the nation’s synthetic fabric demand will now increase its prices.

India imports PTA from China, European Union (EU), North Korea and Thailand. To produce 1kg of polyester staple fibre 0.92kg of PTA is required and to produce 1kg of polyester chips 0.8583 kg of PTA is required.

However, domestic producers of PTA are acting in an unreasonable manner, which puts additional burden on the user industry. Their sole objective is to earn extra profits on the product by seeking imposition of anti-dumping duty. According to the latest estimates the demand supply stands at 4,096,952 MT against 3,420,000 MT which is complete mismatch.

While, the small spinners in the domestic industry are left with no choice other than purchase PTA from big companies at high rates. The PTA imported from China and European Union is much cheaper. But with the anti dumping duty the imports will turn costly in turn increasing the prices of downstream products

In the end, effect of the duty will be finally take up by the consumers of end product as the weavers will be passing on the price rise to the traders.