Polyester Filament
Yarn (PFY) industry comprises of both Partially Oriented
Yarn (POY) and Fully Drawn Yarn (FDY). Presently, there
are 43 manufacturers of PFY which includes major
manufacturers like Reliance Group, Garden Silk Mills,
JBF Industries, Indo Rama Synthetics, Sanghi Polyesters,
Century Enka and FIL who account for 68.81% of total
production capacity in India. It is also important to
mention here that more than 50% of the domestic capacity
is located in the western region due to the proximity of
raw material suppliers and downstream weaving units at
Surat and Bhiwandi. The total installed capacity of the
industry stood at about 10,18,150 TPA in the years
2002-03. The domestic installed capacity grew at CAGR of
13.6% to reach 21,83,300 TPA during the year 2007-08.
PFY Demand in India
The domestic demand for PFY stood at 10,14,755 Tons
during the year 2003. The demand for PFY grew at CAGR of
4.21% to reach an estimated 12,88,523 Tons by the years
2008.
PFY Supply in India
The Production grew from about 9,93,430 MT in 2003 to
14,20,043 MT in 2008 indicating a CAGR of 7.40% in the
interval of 2003-2008.
PFY Imports in India
The Imports of PFY stood at 1,15,100 MT in the year
2003. The imports of PFY in India had declined at 2.7%
during the period 2003-08 to reach 1,00,088 MT in the
year 2008.
PFY Exports from India
The Exports of PFY from India had grown consistently
during the period 2003-2008. The exports of PFY from
India grew from at CAGR of 19.8% to reach 2,31,608 MT by
the year 2008.
Expected improvement in the price competitiveness of
POY / PFY
Prices of POY / PFY, cotton yarn and other blended
yarns are expected to increase. However, the increase in
POY / PFY prices is expected to be lower than that in
the other competing yarns. The price competitiveness of
POY / PFY could increase further if there is a reduction
in the excise duty on raw material and POY. (The excise
duty on POY is expected to decline from 28.60 per cent
to 18.4 per cent by 2006-07. The reduction in the excise
duty would result in an average decline of Rs.11 per kg
in POY prices (and hence, PFY prices) in 2001-02). In
2001-02, the average price of PFY (80 denier) was around
Rs.97 per kg, as compared with the ex-factory price of
cotton yarn (60s count) at around Rs.127 per kg and
nylon filament yarn (NFY) price of around Rs.169 per kg.
Low availability of domestic fibre/yarn
According to CRIS INFAC, during the 2001-02 to 2006-07
period, the increase in the supply of cotton, viscose
staple fibre (VSF) and polyester staple fibre (PSF) is
expected to be restricted as compared with the increase
in domestic demand. The existing capacities have been
operating at a capacity utilisation of around 90-95 per
cent. In addition, no significant capacity additions
have been planned. Cotton availability would be
restricted, as the increase in cotton crop would largely
be due to an improvement in the yield, and not an
increase in the area under cultivation, as in the past.
Favourable changes in Government Policy
The POY / PFY industry started showing the first signs
of an upturn towards the beginning of 2002. This
recovery was on account of certain initiatives taken by
the Government of India that resulted in the following
amendments in the tax legislation:
-Reduction of custom duty on import of Polyester Chips
from 38.50 % to 25 % and retention of custom duty on
import of PFY/ POY at 20 % thereby correcting the
anomaly in the custom duty structure to a large extent.
(Budget 2001)
-Imposition of Anti-Dumping Duty by the Government of
India (vide Notification No. 15/2002 – Customs
dated 08/02/2002) on import of POY from Taiwan,
Thailand, Indonesia, and Malaysia.
Lower per capita consumption
The average per capita consumption (PCC) of fabric in
India is much lower than in its neighboring countries.
India has a huge potential market, given that its PCC is
as low as 1.4 kg as compared China (5 kgs), Pakistan (3
kgs) and Indonesia (5 kgs). India has the advantage of a
large and growing domestic market, and a good GDP
growth.
Rapid urbanization- higher spend on clothing
In India, out of the total population, about 70% is
rural. Behavioral patterns suggest that most of the
fabric demand in this segment is need-based. The urban
demand, on the other hand, is also driven by fashion
trends, and favours more sophisticated textiles, and
variety in designs and colours. The average urban spend
on apparel is higher than rural spend. However, over the
years, the clothing pattern in India has shifted. Men’s
clothing consumption has moved from the traditional
cotton based wear to synthetic fabrics. Cotton dhotis
are giving way to trousers (mostly made of polyester or
polyester blends). Likewise, women are moving from
cotton saris to synthetic saris/dresses.
Levy of Anti-dumping duty on imports
Levy of Anti dumping duty on imports of POY to lower
threats of import leading to availability of better
contribution to domestic manufacturers.
As regards MFY, the product finds good demand from the
manufacturers of zippers, fishing nets, sports nets,
industrial and other brushes, etc. New customers for
this product are tapped by the marketing teams of FIL at
Delhi, and Mumbai.
OVERALL MARKET ASSESSMENT
Keeping in view of the strong fundamentals mentioned
above, CRISINFAC has projected a strong CAGR of 7.8% in
POY industry in line with the growth in fabric
production during the 2001-02 to 2007-08. FIL’s
POY/PFY unit at Silvassa is in close proximity to the
major polyester markets. Since the customers are closely
located, the company is able to service their orders on
a more frequent - small quantity basis. With more
frequent servicing of orders, the company generally has
30-35 days of orders in hand on a regular basis.
Expected improvement in the price competitiveness of
POY / PFY 
