The Central government has eliminated the basic customs duty on over 40 crucial petrochemical raw materials for a three-month period in Surat. This move is aimed at alleviating cost pressures on the city’s textile and plastics industries amidst escalating global input prices. Materials like purified terephthalic acid (PTA) and monoethylene glycol (MEG), vital for man-made fiber production, previously taxed at 7.5%, will now have zero duty.
Industry representatives in Surat welcomed this decision, especially as crude oil price hikes, linked to geopolitical tensions, have significantly raised production costs. Nikhil Madrasi, President of the Southern Gujarat Chamber of Commerce and Industry, highlighted that the surge in crude prices has led to a 30% increase in yarn prices.
The reduction in customs duty is expected to lower production costs by 5 to 10%, with yarn producers already cutting prices by up to Rs 7 per kilogram. Bhavin Vora, Director of Polymer Bazaar, noted that raw material prices had surged by 50 to 60% in early March, impacting order execution for many units.
Pradeep Parikh, a yarn trader in Surat, emphasized that reduced input costs could enhance the competitiveness of small and medium enterprises in export markets. He estimated a direct positive impact of 7 to 10% on the yarn market due to this government decision. Lalit Sharma, a textile trader and President of the Textile Youth Brigade, highlighted the relief provided by the duty cut amidst export disruptions and high yarn prices, offering stability to the industry during challenging times.
Stakeholders believe that this temporary duty reduction could help in restoring order flows and easing working capital stress. However, they caution that long-term stability hinges on global price trends and supply chain conditions.
