The-Polyester-Prince

Minister Pai overruled objections from his department to give Reliance the clearances
to quadruple its texturising capacity in 1975.
Two anecdotes are told about confident, even brazen, approach to the muttered
denigration of his success that inevitably sprang up. On one occasion, a rival yarn
trader allegedly spread the rumour that Dhirubhai was going bust. He was indeed
short of cash, but went to a public notice board in the yarn market and put up a sign
inviting anyone he owed money to come and have their advances repaid. No one did.
Another story is attributed to D. N. Shroff, president of the Silk and Art Silk Mills
Research Association in the 1970s. Market gossip accused Dhirubhai of black
marketeering. Dhirubhai asked Shroff to convene a meeting of the association’s
executive committee, which included many of his critics, and then turned up to face
it. ‘You accuse me of black marketing,’s he challenged, ‘But which one of you has not
slept with me?’ All present had bought or sold yarn to Dhirubhai at some stage.
In March 1977, however, Indira and Congress were swept from power in the
elections called after her two years’ rule under Emergency powers was lifted. But her
government gave Dhirubhai a parting gift. Over the 1976-77 fiscal year (April-March)
Dhirubhai had accumulated REP licences both from its own exports and from
purchases in the market, worth some Rs 30 million. On 7 February, about three
weeks after the elections were announced; the government was persuaded to
exempt all polyester yarn imports under REP licences issued since April 1976 from
customs duty, which was then 125 per cent. It was a gift of Rs 37.5 million to
Dhirubhai.
Indira’s replacement was the Janata [People’s] Government, a coalition of anti-
Congress parties under Morarji Desai, the austere and self-righteous former finance
minister Indira had driven from Congress because he had opposed her
nationalisation policies in the late 1960s.
But, at least to begin with, Dhirubhai fared well under Janata, helped by the good
offices of the prime minister’s son, Kantilal Desai. On 22 August 1977, the Janata
minister for commerce, Mohan Dharia, abruptly cancelled the High Unit Value
Scheme, and allowed any REP licence holder-not just exporters of nylon fabric-to
import a specific quantity of polyester yarn.
The premium on licences for PFY crashed from 500 per cent to 50 per cent almost
overnight. It was reported a year later by the Indian Express that Reliance stepped
into the market to acquire licences at this low premium, and opened letters of credit
for imports totalling Rs 50 million. Then, on 2 September, the Chief Controller of
Imports and Exports (in the Commerce Ministry) announced another sudden switch
of policy. To help Bonafide users of PFY secure their reasonable requirements, the
linkage of exports of synthetic textiles with the import of PFY was restored with
immediate effect. Registered exporters who had entered form import contracts up to
2 September would be allowed to import directly. But henceforth all other importers
would have to take their licences to the State Trading Corporation, which would be
the sole channel for imports of yarn.
It was not until March 1978 that the first supplies of yarn began reaching Indian
markets through the STC. Over the six months till then, Reliance took delivery of all
the PFY supplies for which it had contracted, and was able to squeeze a totally