Producers Of Recycled PSF Bargain Hard To Retain Tax Advantage Over Virgin PSF

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Producers Of Recycled PSF Bargain Hard To Retain Tax Advantage Over Virgin PSF

The All India Recycled Fibre & Yarn Manufacturers Association, which represents 35 recycled polyester staple fibre (PSF) producers in India, has sought the urgent intervention of Finance Minister Arun Jaitley and Textiles Minister Smriti Irani in ensuring that the current excise duty cost advantage of recycled PSF vis-à-vis virgin PSF remains unchanged after the implementation of GST. In the current tax regime, virgin PSF manufacturers are levied 12.5 per cent excise duty and recycled PSF attracts a mere 2 per cent. This allows spinners to get the cost advantage of 10.5 per cent in the event they opt to buy recycled PSF. Pointing out that their industry continued to grow mainly due to the concessional rates of duty bestowed on them by the Indian government, the Association pleaded that the status quo be maintained even after the implementation of GST. “This will help in maintaining our zeal in recycling PET bottles which would otherwise harm the environment. Besides, it’s a question of the survival of our industry,” said the association. “If the government fails to maintain the status quo in the differential taxation, the entire PET recycling industry will be faced with a crisis situation. For, in the event of loss of cost benefit, PSF buyers would make virgin PSF their preferred option. This would kill the PET bottle recycling plants. Apart from loss of jobs, it will also harm the environment in a big way,” the association stated in its release. Citing figures, the Association emphasised, “The PET bottle recycling value chain provides direct and indirect employment to around 500,000 people, which includes rag pickers, scrap dealers and employees working in the industry. The industry has grown in the last ten years and the current production of recycled PSF is around 660,000 metric tons per annum and the turnover is around Rs 5,000 crore. We currently recycle around 700,000 metric tons of used PET bottles.” Stating that their business is directly assisting the Prime Minister’s Swacha Bharat Abhyian, the association pointed out that “But for our efforts millions of PET bottles would be strewn around all over India and also be used in landfills. This poses a grave risk to the environment as it takes 500 years for PET to decompose.” BP Sultania, President of the Association stated, "First we were hit by the ban on import of PET bottle scrap, which led to a steep increase in prices of locally available PET bottle scrap. Now, if GST on recycled PSF is at parity with virgin PSF, this will make the survival of the PET bottle recycling industry very difficult."