NITMA cautions that the duty will deliver a devastating blow to the predominantly MSME-based downstream industry, imperiling millions of livelihoods and stalling planned investments.
The Northern India Textile Mills’ Association (NITMA) alongside the other trade bodies, industry associations & stakeholders such as PTAIA , CITI, SGCCI , SIMA recently met with the Jt. Secy – Ministry of Textiles & Secretary- Department of Chemicals & Petrochemicals to register their strong opposition against the Directorate General of Trade Remedies’ (DGTR) recommendation to impose an Anti-Dumping Duty (ADD) on Mono Ethylene Glycol (MEG), a fundamental raw material for the Man-Made Fibre (MMF) value chain. NITMA cautions that the duty will deliver a devastating blow to the predominantly MSME-based downstream industry, imperiling millions of livelihoods and stalling planned investments.
Core concerns: Exorbitant cost hike and industry paralysis
Industry’s primary concern centres on the massive cost escalation the ADD would trigger. MEG is a key input for polyester staple fibre (PSF), yarn, filament, fabrics, and garments.
“The proposed Anti-Dumping Duty is estimated to raise MEG costs further by approximately 20 per cent, this hike will practically force MMF units across India to shut down. The industry is in such a state of shock and panic that unit owners are ready to hand over the keys to their factories, as they cannot sustain this devastating blow.”
The downstream sector is already struggling with uncompetitive raw material pricing due to the Bureau of Indian Standards (BIS) quality control order.
- Pre-BIS Scenario: Domestic PSF was already 15-20 per cent more expensive than what global competitors, like those in China, paid, due to various freight and duty costs.
- Post-BIS Scenario: The lack of import threat from non-BIS countries has allowed domestic fibre producers to charge a premium of Rs 6–7 per kg over imported parity.
- Impact of ADD on MEG: Imposing ADD would widen this premium further, to approximately Rs 10–11 per kg, severely crippling the already strained downstream MSMEs.
Dire consequences for India’s textile ambition
Industry projects a series of severe consequences should the duty be implemented:
- Massive Job Losses: Especially concentrated in the MSME segment across the MMF value chain.
- Erosion of Competitiveness: Higher production costs will severely reduce export competitiveness and increase reliance on imported fabrics and garments.
- Investment Delays: The ADD threatens to delay over Rs 200 billion in planned investments, including critical projects under the Production Linked Incentive (PLI) scheme.
- Consumer Impact: The benefits of the recent GST cut will be nullified by the production cost surge.
- Market Concentration: The duty will only benefit one large MEG producers at the direct expense of lakhs of MSME units and their workforce.
Key facts underscore need for duty-free raw material: The structural reality of the domestic market makes the ADD unjustifiable and counterproductive:
“The Man-Made Fibre segment, particularly polyester, is the main growth driver for the Indian textile industry, accounting for 50 per cent of total textile consumption,” the spokesperson added. “Imposing ADD on MEG, which would raise yarn and filament prices by Rs 3.50 to Rs 4.00 per kg, makes achieving the $350 billion textile trade target by 2030 virtually impossible.”
Industry’s rebuttal of misleading pro-duty claims being spread across the media
- Claim 1: Price increases are manageable and can be passed on
A MEG duty raising costs by Rs. 9–13 per kg cannot be absorbed by MSME downstream units without wiping out already thin margins. Even a Rs. 4 per kg rise in yarn pushes fabric costs for small weavers and triggers a shift toward imports, destroying jobs. - Claim 2: Domestic capacity can meet demand
Installed MEG capacity is insufficient relative to demand; average production falls short and available domestic supply for MMF is limited. Liquid handling, vessel scheduling and storage constraints prevent rapid import-based substitution. - Claim 3: Impact on MSMEs is negligible
The true burden on MSMEs exceeds several thousand crores; many units will halt operations and planned expansions under PLI will be deferred, jeopardizing the sector’s ability to reach government trade targets. - Claim 4: There is no shortage and dumping is proven
Market signals show tight supply and global-linked pricing; removing ADD on PTA in 2020 preserved competitiveness for polyester feedstocks and the same logic applies to MEG today.
MMF Industry’s unified demand
- Reject the proposed ADD on MEG
- Remove the BIS on MEG
- Keep the Key Inputs free from levies to protect MSMEs, jobs and India’s textile growth targets.