The-Polyester-Prince

Reliance made sure that a comment by Du Point’s then international director,Richard Chinman, that such a plant would have taken 26 months to build in theUnited States, had wide publicity in India. ‘Reliance Textile Industries, now the fourthlargest private sector company in the country, continues to burn up the track with itsblistering growth record’, said the magazine India Today in February 1983. ‘Close onthe heels of the commissioning of its polyester filament yarn plant at Patalganga inMaharashtra, the company has set its sights on still bigger projects.’ Dhirubhai stilldemonstrated his uncanny grip on government trade and industrial policy, and theirimplementation. While the canalization of imports through the State Trading Corphad been abandoned in April 1981, and polyester filament yarn (PFY) and partiallyorientedyarn (POY) placed on the ‘pen general list’s of imports, the right to importthe yarn was still confined to so-called actual users. The Customs House in Bombaytook the line that these did not include large cotton textile mills - despite the growingdemand for cotton-polyester blends-but only the small ‘art silk’s power-looms.Reliance had already organised power-looms as outsources, giving them polyesteryarn and taking back their grey cloth for finishing and dyeing at Naroda, On 23November 1982, three weeks after Patalganga went into production, the governmentput an additional Rs 15 000 a tonne duty on PFY and POY imports, allowing Relianceto raise its prices and still force India’s small yarn crimpers and power- looms to buyits products. The policy switch had been telegraphed early in November by asubmission made to New Delhi by the Association of Synthetic Fibre Industry thatdumping of PFY and POY by foreign producers under the open general licencechannel was causing a curtailment of local production and pile-up of inventories,leading to heavy losses.The All-India Crimpers’ Association, representing about 150 small processors whotexturised PFY and POY into fibre ready for weaving and knitting, took out a series ofanguished newspaper advertisements headlined: ‘should the country’s texturisingindustry be allowed to die?’ The crimpers said the case for anti-dumping duty was ‘isleading, distorted and untruthful’. Domestic polyester output had risen 60 per cent in1981 to 16000 tonnes, and still fell short of demand estimated at 50000 tonnes ayear. The rush into PFY production by new producers scarcely pointed to a gluttedmarket.Existing customs duties worked out to a total 650 per cent on landed costs forimporters, topped by further excise duty and sales tax on the processed product.Texturised polyester yarn had become more lucrative for smugglers than thetraditional gold, wristwatches and electronics-and huge consignments had recentlybeen intercepted, usually misdeclared as some other low-duty goods. Instead a caseexisted for an immediate duty cut and freedom for anyone to import.The pleas were ignored. ‘The government has finally declared a deaf car to our cry ofanguish,’ said the Crimpers’ Association in an advertisement on 7 December. By itscalculation, the effective duty on PFY and POY had risen to 750 per cent with theaddition of the Rs 15 000 a tonne anti-dumping levy. The Reliance plant atPatalganga immediately exceeded its licensed capacity and produced some 17600tonnes of polyester yarn in 1983, its first full year, thereby doubling India’s totaloutput. The extra duty in effect added Rs 240 million to Reliance’s revenue. In late1984, Finance Minister Pranab Mukherjee announced a new policy to endorse higherthan licensed capacity on the part of industry, and consequently in late 1985Reliance received an effective retrospective licensing of its capacity to 25 125 tonnesa year.