‘Purified Terephthalic Acid (PTA)’

  • Category
    Polity & Governance
  • Published
    13th Feb, 2020

Context

The government has announced to abolish in “public interest” an anti-dumping duty that was levied on imports of a chemical called Purified Terephthalic Acid (PTA).

About Purified Terephthalic Acid (PTA):

  • Purified Terephthalic Acid (PTA) is a crucial raw material used to make various products, including polyester fabrics.
  • PTA makes up for around 70-80% of a polyester product and is, therefore, important to those involved in the manufacture of man-made fabrics or their components. This includes products like polyester staple fibre and spun yarn.
    • Cushions and sofas may have polyester staple fibre fillings.
    • Some sportswear, swimsuits, dresses, trousers, curtains, sofa covers, jackets, car seat covers and bed sheets have a certain proportion of polyester in them.

What the government has decided?

  • The government has abolished anti-dumping duty on Purified Terephthalic Acid (PTA).
  • The move does away with a previous government decision to block countries like China, Taiwan, Malaysia, Indonesia, Iran, Korea and Thailand from substantially exporting the material — purified terephthalic acid (PTA), to India.

Reason behind the decision:

  • PTA is a raw material for many of the industries. There has been persistent demand from industries that they should be allowed to source PTA at an affordable rate, even if it means importing it.
  • Easy availability of this “critical input” at competitive prices was desirable to unlock “immense” potential in the textile sector, seen as a “significant” employment generator.
  • The duty had meant importers were paying an extra $27-$160 for every 1,000 kg of PTA that they wanted to import from countries like China, Taiwan, Malaysia, Indonesia, Iran, Korea and
  • Removing the duty will allow PTA users to source from international markets. It may make it as much as $30 per 1,000 kg cheaper than now.

How anti-dumping was imposed on PTA?

  • The anti-dumping duty on PTA was imposed after two domestic manufacturers (MCC PTA India Corp Pvt Ltd and Reliance Industries Ltd) approached the Directorate General of Trade Remedies (DGTR) in 2013.
  • The companies, which submitted that they accounted for over 50% of the domestic PTA industry, had argued that some countries had been exporting the product to India at prices lower than its value in their own domestic markets.
  • This dumping of PTA into the Indian market had a “significant” adverse impact on the domestic industry, they argued.
  • Following an investigation, DGTR agreed with MCCPI and RIL’s claims and imposed anti-dumping duties on PTA imported from South Korea and Thailand in 2014 and 2015, and from China, Indonesia, Taiwan, Iran and Malaysia in 2015 and 2016.

Anti-dumping duty is a tariff imposed on imports manufactured in overseas countries and that are priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on foreign imports when it believes that the goods are being dumped in the domestic market. This duty is imposed to protect local businesses and markets from unfair competition by foreign imports.

 Significance of the move:

  • This announcement has come as a boost for the PTA users and the entire man-made fibre textiles & clothing segment.
  • It would greatly help the country to enhance the global competitiveness, boost exports and also enable the domestic manufacturers to compete with the cheaper imports.
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