Context
Indian textile manufacturers have appealed to the government to remove the anti-dumping duty (ADD) on Mono Ethylene Glycol (MEG) — a key raw material for polyester yarn, fibres, and fabrics. The industry argues that the duty has increased production costs and weakened India’s global competitiveness in the man-made fibre (MMF) sector.
Key Highlights
- MEG Price Impact: The anti-dumping duty has made MEG about 20% costlier for Indian manufacturers.
- Import Dependence: Around 40% of India’s MEG requirement is met through imports, mainly from Singapore, Taiwan, and Saudi Arabia.
- Domestic Production Constraints: No new domestic MEG manufacturing projects are expected in the next 3–4 years, leaving India reliant on imports.
- Competitiveness Issue: Higher input costs have made Indian MMF-based products less competitive in global markets.
- Government Engagement: The industry has appealed to the Textiles, Finance, and Chemicals Ministries to reconsider the ADD.
- GST Context: Although the GST rate on MMF yarn and fabrics was reduced recently to aid the sector, the raw material cost continues to be a critical challenge.
Detailed Insights
- Impact on the MMF Sector
- The anti-dumping duty raises input costs, undermining the profitability and export competitiveness of MMF-based textiles.
- High MEG prices can shift demand toward imported finished products, hurting domestic manufacturers and employment.
- This goes against the government’s push to promote synthetic textiles as part of India’s export diversification strategy.
- Import Dependency and Value Chain Pressure
- India’s polyester industry depends on two main raw materials — Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG).
- Domestic MEG production capacity remains inadequate, forcing heavy reliance on imports.
- The ADD, originally imposed to protect local producers, now discourages investment and hampers growth along the polyester value chain.
- Economic Implications
- Higher MEG prices inflate production costs for apparel, garment, and synthetic fabric producers.
- This leads to higher retail prices, reduced export margins, and lower global market share for Indian manufacturers.
- The policy also deters new investments in the MMF and technical textile segments — both identified as growth engines under PM MITRA Parks and PLI schemes.
Industry Position
- Textile associations argue for international price parity for MEG to sustain the competitiveness of India’s polyester segment.
- They emphasize that ADD protection is unnecessary due to limited domestic capacity, making it counterproductive for downstream industries that employ millions.
Scientific and Economic Concepts
- Mono Ethylene Glycol (MEG):
- A petroleum-derived organic compound made from ethylene oxide.
- Used to produce polyester fibres, resins, and antifreeze.
- Anti-Dumping Duty (ADD):
- A trade protection tool imposed to prevent foreign producers from selling goods below fair value in domestic markets.
- Intended to safeguard local producers but can raise consumer and industrial costs if applied indiscriminately.
- Man-Made Fibres (MMF):
- Synthetic fibres like polyester, viscose, and nylon, forming an essential part of India’s export diversification and Make in India goals.