Recycled PSF makers seek maintaining tax advantage as against virgin PSF in GST

The All India Recycled Fibre & Yarn Manufacturers Association has requested the Union Finance Ministry to maintain the current excise duty cost advantage of recycled polyester staple fibre (PSF) vis-à-vis virgin PSF, when finalising the Goods & Services Tax (GST) rate.

Under the current excise tax regime, recycled PSF attracts 2 per cent concessional excise duty, while virgin PSF manufacturers are levied 12.5 per cent excise duty. PSF spinners prefer to purchase recycled PSF due to the cost advantage of 10.5 per cent.

According to the association, which represents 35 recycled PSF producers, if the existing differential is not maintained, operations of the whole PET recycling industry will become unviable as PSF buyers would prefer to buy virgin PSF. This would lead to closure of PET bottle recycling companies, leading to destroying jobs as well as harming the environment.

The PET bottle recycling employs around 500,000 people directly and indirectly, which includes rag pickers, scrap dealers and employees working in the industry. The current production of recycled PSF is around 660,000 metric tons per annum and turnover around Rs 5,000 crore. The industry which has grown in the last ten years currently recycles around 700,000 metric tons of used PET bottles.

These PET bottle recyclers are directly helping the 'Swach Bharat' mission by recycling billions of PET bottles per annum, which otherwise would have been ended up in landfills, posing grave risks to the environment. It takes 500 years for a PET bottle to decompose.

"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 and 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," BP Sultania, president of the All India Recycled Fibre & Yarn Manufacturers Association said.

"Under the circumstances, we urge Finance Minister Shri Arun Jaitley to consider our demand of continuing the tax cost advantage, when considering GST on recycled PSF. We also seek intervention of Textiles Minster Smt. Smriti Irani to convince the finance ministry to accept our valid demands and thereby safeguard and promote the PET bottle recycling industry," he added.

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Arun Rao
Taurus Communications
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BP Sultania
All India Recycled Fibre & Yarn Manufacturers Association
New Delhi
Tel: 981 105 7174 Email: [email protected]