The Indian acrylic fibre industry is trying to convince the government that it needs 'protection' from threats such as duty inequalities, stagnant demand, over-production, and cheap imports. The country's consumption has settled at 110,000 tonnes, against a manufacturing capacity of 116,000 tonnes, valuing the sector at US$160 million.

There are five main acrylic yarn manufacturers in India: Indian Acrylics Ltd, Consolidated Fibre and Chemicals, Indian Petrochemicals Corporation (a Government-owned company), Pasupati Acrylon, and Vardhaman Acrylics. JK Synthetics Ltd gave up production when customs duty on the fibre was reduced to 24 per cent.

In addition to customs duty, imports also attract a number of other duties, chief among which is the so-called 'countervailing duty'. This corresponds to the excise duty that an Indian producer would pay if the item had been made locally.

The industry currently carries an inventory of 12,000 tonnes, or 40 days' production, which is by no means high. Current imports from normal-duty countries are about 15,000 tonnes, and a similar quantity comes from Nepal, which is free from customs duty under a trade agreement between the two countries.

By Navroz Havewala.