- Excise duty on MEG (Methyl Ethyl Glycol) is expected to be reduced from 12% to 8%. MEG is a key ingredient in manufacturing of POY (Partially Oriented Yarn).
Currently, while POY attracts 8% excise duty, MEG attracts 12% duty creating CENVAT credit for the companies. The expected reduction in the excise duty for MEG will remove the anomaly in the duty structure.
- Excise duty in POY is expected to be reduced to 4% from current level of 8%. This will rationalize the duty structure, as duty on manmade yarn will be at par with that of cotton yarn.
- Customs duty for inputs required in specified textile manufacturing machinery is expected to be reduced from the current level of 5-15% (depending on the nature of input). There is also an expectation that the government will enhance the spectrum of specified machinery.
IDBI Capital Market Services Ltd.
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