Ayush Joshi & Paranjoy Guha Thakurta
A high-stakes tussle over Mono Ethylene Glycol (MEG), the raw material that powers India’s man-made fibres industry, is poised to tear through the country’s textile backbone. With a huge (40 per cent) domestic demand-supply gap of MEG, a proposed government policy could tighten the chokehold further, tilting the field towards giants like Reliance Industries and Indian Oil Corporation while endangering thousands of small manufacturers and the crores who depend on them.
1.
POLYESTER POWER PLAY
In the vast, sprawling and diverse ecosystem of Indian industry, few sectors are as vital, yet as vulnerable, as the textile industry. It is a sector that clothes the nation, employs tens of millions, and serves as a critical pillar of the nation’s exports. It is also the country’s second-largest employer after agriculture.
Beneath the surface of this bustling industrial sector, a fierce and high-stakes battle is unfolding: a fight for survival between thousands of small manufacturers and a powerful corporate bloc. Leading that is Reliance Industries Limited (RIL), India’s largest private conglomerate, headed by Mukesh Dhirubhai Ambani. Joining it are Indian Oil Corporation (IOC), one of the country’s biggest public-sector firms, and India Glycols Limited (IGL) of the Bhartia group.
The conflict is centred around a colourless, odourless, viscous liquid known as Mono Ethylene Glycol (MEG). To a layperson, MEG is an obscure chemical term found in textbooks. To the Indian textile industry, it is the lifeblood of the polyester value chain, a raw material without which spindles stop spinning and looms fall silent.
Should the fate and the future of this important segment of the Indian economy that provides livelihoods to crores (see graphic 1) be controlled by a few large companies, notably RIL and IOC? The answer is clearly an emphatic “no”.
What DGTR Is Trying To Do
This report analyses a recent recommendation of the Directorate General of Trade Remedies (DGTR) to impose Anti-Dumping Duty (ADD) on imports of MEG. The DGTR is attached to the Union Ministry of Commerce and Industry and deals with “trade remedial functions” such as the imposition of ADD, Countervailing Duty (CVD), Safeguards Duty (SGD), Quantitative Restrictions (QRs) under a single-window framework. As a quasi-judicial body, it conducts independent investigations before submitting its recommendations to the Finance Ministry.
The directorate is also tasked with ensuring a level playing field for the domestic industry against unfair trade practices such as dumping and actionable subsidies from exporting countries. It does so through trade-remedial measures grounded in the frameworks of the World Trade Organization (WTO), domestic laws and relevant international agreements. The DGTR is also expected to function transparently and within strict timelines. Its mandate includes supporting Indian firms, including exporters, when they face trade-remedy investigations initiated by other countries.
How effective this government entity, DGTR, has been and how susceptible it is to pressures from politically well-connected lobbies will become known as you read the story that follows. The article has been written after perusing a trove of internal communications, industry representations, legal petitions and granular price data from 2024 and 2025. The story we narrate reveals a disturbing, systemic pattern of regulatory manoeuvring. The evidence we provide suggests that the machinery of the Indian state is being leveraged to aid the country’s largest MEG producer, RIL, at the expense of Micro, Small and Medium Enterprises (MSMEs).
The DGTR’s findings of September 23, 2025, proposing “punitive” customs duties of $103–$137 per metric tonne on MEG imports from strategic partners such as Kuwait, Saudi Arabia and Singapore, have sparked a firestorm of protest. Industry groups such as the Polyester Textile Apparel Industry Association (PTAIA), among fifteen others, argue that this move is not merely a trade remedy but would signal a “death warrant” for downstream manufacturers of polyester fibre and fabrics. The duties would neutralise the recent benefits given under the Goods and Services Tax (GST) regime, derail the government’s own Production Linked Incentive (PLI) scheme and jeopardise over ₹20,000 crore in planned investments.
This report dissects the “injury” claims made by the domestic industry players, the glaring disconnect between government export targets and protectionist trade barriers, the geopolitical ramifications of taxing key energy partners, and the human cost of corporate monopolies. It traces the historical lineage of these duties, invokes the Polyester Prince saga of the 1980s and describes how the playbook of protectionism has evolved but remains fundamentally unchanged.
Telegram From Tiruppur
On November 17, 2025, an email thread began to circulate that laid bare the panic gripping sections of Indian textile manufacturing units. The subject line of the email was classic bureaucratese: “Fwd: Request for your kind support & recommendation to the Ministry of Finance not to approve DGTR’s Final Findings dated 23/09/2025”.
The content seemed nothing short of an existential distress signal. The email contained a desperate plea from the representative of the PTAIA. The communication was no routine lobbying effort. It was a frantic attempt to halt a bureaucratic juggernaut that was threatening an entire industry comprising more than 3,500 manufacturing units, most of them MSMEs.
The sector’s structure (see graphic 2), detailed in a letter sent to Union Revenue Secretary Arvind Shrivastava on November 11 this year, a copy of which is with the authors.
The correspondence referenced a letter dated October 23, 2025, addressed to the Union Finance Ministry, that implored the government to reject the findings of the DGTR (F. No. 6/34/2024-DGTR)recommending the imposition of significant ADD on MEG.
The timing of this plea is critical. The textile industry in India is far from a few monolithic giants; it is a fragmented, chaotic, yet vibrant tapestry of power loom owners, spinners, knitters and garment manufacturers clustered in industrial hubs located across the country, notably in Surat (Gujarat), Ludhiana (Punjab), Tiruppur and Erode (both in Tamil Nadu). These units are not entities with deep pockets or diversified balance sheets. They operate on razor-thin profit margins, often as low as 7-8 per cent. For these MSMEs, raw material costs are not just a line item on a spreadsheet; they are the primary determinant for their survival.
Cost of Chemistry
To grasp the magnitude of the panic that swept through the man-made fibre (MMF), textiles and apparel-making sector, one should understand the chemistry that underpins what goes by the description “modern fashion”. Polyester, the fibre that clothes much of the modern world – from high-performance sports-wear of athletes to affordable daily-wear of the common citizen – is a polymer produced through a specific chemical reaction. It is formed by reacting Purified Terephthalic Acid (PTA) with MEG.
The stoichiometry, or the study of the quantitative relationships between reactants and products in a chemical reaction, of this relationship is unforgiving. To produce polyester, one needs approximately 70 per cent PTA and 30 per cent MEG by weight. While the supply and pricing of PTA have stabilised following previous regulatory battles that concluded in 2020, MEG has emerged as the new frontier of conflict. It is the volatile variable in the production equation.
The Indian textile industry is a ravenous consumer of this chemical. According to data submitted by the PTAIA, the industry consumes approximately 31.00 lakh metric tonnes (MT) of MEG annually. However, the domestic production capacity tells a story of stark insufficiency. Domestic manufacturers produce only 19.41 lakh MT of MEG per year, leaving a gaping, structural deficit of 11.59 lakh MT; a shortage of nearly 40 per cent that can be met only through imports.
This deficit is not a temporary fluctuation; it is a chronic condition of the Indian petrochemicals landscape. The downstream industry relies on imports not out of preference for foreign goods, but out of sheer necessity. Without these imports, factories would simply run out of raw material.
Imminent Shock
The DGTR’s bid to levy anti-dumping duties on imports from major suppliers—Equate in Kuwait, Sabic in Saudi Arabia, and several Singapore-based entities—threatens to upend an already fragile equilibrium. The proposed duties are substantial: Equate (Kuwait): $103 per MT; Sabic (Saudi Arabia): $113 per MT; Singapore entities: $137 per MT.
In rupee terms, this translates to a cost hike of between ₹9.00 and ₹12 per kilogramme. For a standalone spinner in Ludhiana, operating on very thin profit margins per metre of cloth, a sudden ₹12 hike in raw material costs, or a nearly 20 per cent spike, is catastrophic for its viability in a highly competitive marketplace.
In a sector where global competition from textile and apparel makers in Vietnam, Bangladesh and China is fierce, buyers will switch suppliers for a difference of a few US cents in raw material costs. A 20 per cent hike in costs is not an adjustment; it is a death sentence. The PTAIA’s letter to the Union Finance Ministry is explicit in its warning: “Increase in raw material cost(s) will compel the industry to close … plants”, and there would be no future expansion of production capacities. This is the human cost of the tariff on MEG: shuttered factories, silent looms and thousands of workers thrown out of their already precarious jobs.
2.
DAVID(s) VS GOLIATH(s)
To understand why such a damaging ADD is being considered, one has to go deeper. And the first place to look is at who stands to benefit from the DGTR proposal.
Domestic production of MEG in India is an oligopoly, a market structure dominated by a handful of powerful players. There are just three significant manufacturers of MEG in the country: Reliance Industries Limited, Indian Oil Corporation Limited and India Glycols Limited.
Of these, RIL is the undisputed hegemon. It is not merely the largest producer; it is a colossus that straddles the entire petrochemicals value chain. RIL controls every stage of their production, from crude oil refining and naphtha cracking to ethylene production, MEG synthesis, and finally, the production of polyester fibre and fabric.
The critical distortion in the Indian market for petrochemicals arises from a phenomenon called “captive consumption”. RIL is unique here: the behemoth is both the largest producer of MEG in India as well as one of its largest consumers. The company consumes nearly 60 per cent of its own MEG production internally to manufacture its downstream polyester products.
This internal transfer of raw material occurs at opaque prices, creating a massive structural advantage. When RIL petitions the government for protection against “dumping”, it argues that low-priced imports are injuring the domestic industry.
Dumping is when a company exports a product at a price lower than its domestic price or even below the cost of production. This trade practice is considered unfair because it hurts producers in an importing country by making it tough for them to compete. Since dumping can lead to loss of jobs, governments in different parts of the world impose tariffs and quotas to protect local industries and their employees.
However, in India, in the case of RIL, the “injury” it complains about could be largely theoretical since it internally consumes 60 per cent of its output. In fact, the real victims of high domestic prices are RIL’s competitors in the downstream textile market, the standalone spinners and weavers who do not own petrochemical plants and must buy MEG from the open market. If the government imposes an ADD, the price of MEG in the open market would go up to match the landed cost of imports plus the customs duty. RIL, as a seller of MEG to third parties, profits immensely from these higher prices. Simultaneously, RIL’s internal downstream units (which use its own captive MEG) effectively obtain raw materials at cost prices.
This regulatory intervention creates a double-edged sword that reduces competition. It acts as a subsidy for the integrated giant, allowing it to subsidise the company’s downstream operations with the profits from tariff-protected upstream sales, while its smaller rivals are forced to pay a premium that renders them uncompetitive. So why is RIL keen on the imposition of an ADD?
Polyester Prince Redux
This strategy of the Mukesh Ambani-headed company is neither new nor novel; it is a blast from the past. In fact, the famous Polyester Prince phenomenon is well-documented in the meteoric ascent of the corporate empire founded by the late Dhirajlal Hirachand (Dhirubhai) Ambani (1932-2002), a rise fuelled by favourable tariff structures, protecting RIL’s domestic production while penalising imports.
The decade of the 1980s saw one of the most talked-about clashes in corporate India between Dhirubhai Ambani and Nusli Wadia, the head of Bombay Dyeing, a rival manufacturer of synthetic textiles. In his biography of Ambani, titled The Polyester Prince, published in January 1997, Hamish McDonald detailed the high-profile battle between the tycoons. His book was not available in India due to legal disputes till 13 years later, in 2010, that too, in a different updated version – renamed Ambani & Sons (Indian edition) or Mahabharata in Polyester (international edition). Among other things, Australian journalist McDonald had narrated an elaborate story of how the government changed rules relating to imports of raw materials used in the manufacture of polyester fibre to help the Reliance group at the expense of its competitors.
This tale is being repeated again and again.
In an article for the Economic and Political Weekly published in September 2014, titled “Polyester Prince 3.0: Close Encounters of the Third Kind”, one of the writers of this flagship story, Paranjoy Guha Thakurta, had detailed how an almost exact scenario played out 11 years ago. In 2014, a fierce battle was fought over PTA, the other key ingredient used in producing polyester. Despite bitter opposition, the government imposed ADD on PTA, leading to years of inflated costs for the industry. It was only in the 2020 Union Budget that Finance Minister Nirmala Sitharaman finally revoked these duties, acknowledging that the availability of raw materials at competitive prices was crucial for the “public interest”.
After 2020, the battleground shifted from PTA to MEG. The chemical changed, but the playbook remains identical: leverage the “domestic industry injury” clause of the WTO framework to secure protective tariffs, thereby squeezing the margins of non-integrated competitors and securing a stranglehold on the market.
Manufactured Inflation
The legal and economic justification for any anti-dumping duty rests on the premise that foreign exporters are flooding the market with goods below their normal prices or even below their costs of production, thereby causing material injury to domestic producers. However, the data suggests that India’s reliance (pun unintended) on imports is not a choice driven by price predation, but a necessity driven by domestic incapacity.
With a structural demand-supply gap of nearly 1.2 million tonnes (see graphic 3), domestic manufacturers of MEG simply cannot meet the demand for the product. Imports are thus essential to keep the wheels of the textiles and apparel manufacturing industry turning. Our considered opinion, which is, by and large, also the view of PTAIA, Confederation of Indian Textile Industry (CITI) and over a dozen other associations (listed later in this article) representing makers of textiles and garments, is that by taxing imports of MEG, the government is not actually protecting the domestic petrochemicals industry, which is utilising its capacity to make the product. It is simply taxing the shortage. The result is “manufactured inflation” that serves no economic purpose other than to increase the profit margins of producers, like RIL, IOC and IGL.
Put differently, the government’s actions in the past and the DGTR’s proposal to impose an anti-dumping duty would help a few large corporations at the expense of consumers of fabrics and garments made using MMF.
Myth of Dumping
A crucial aspect of the DGTR’s investigation is whether foreign suppliers are genuinely “dumping” MEG in the Indian market or whether their greater efficiency or higher productivity makes their product more competitive than the MEG manufactured domestically by RIL, IOC and IGL. The data, submitted by the downstream industry, paints a revealing picture: the trends in prices of MEG in 2024 and 2025 challenge the narrative of “predatory pricing”. Textbooks on trade economics define the term to mean a strategy whereby a company sets prices below its production costs to drive competitors out of the market to establish a monopoly.
While consumers may benefit from lower prices in the short term, the long-term result is often higher prices and reduced choice once competitors are eliminated. In many countries, such practices are not just frowned on, but considered illegal because they are anti-competitive, as the goal of the predator company is to raise prices after acquiring a monopoly or a dominant position in the market of a product.
The data for 2025 shows an even starker trend (see graphic 4). In 2025, the average landed price of MEG supplied by Sabic (Saudi Arabia) was $536.4 per MT, significantly higher than the China benchmark ($522.1) and even higher than RIL’s average price ($525.35).
This data effectively dismantles the “dumping” narrative. If international suppliers like Sabic and MEGlobal are selling at prices higher than the domestic producer RIL, where is the dumping taking place? As the two associations, PTAIA and CITI, argue: “No way Sabic & MEGlobal are charging lower prices than RIL MEG.” In this context, the imposition of anti-dumping duty on imported MEG appears divorced from the economic reality of pricing, suggesting that the “injury” claimed by domestic players like RIL is not due to price undercutting. Why then is the lobbying going on with the DGTR? Is it due to inefficiencies in manufacturing MEG domestically by RIL, IOC and IGL? Or is it simply a ploy to maximise profit?
Premium Profiteering
It is alleged that domestic producers are already charging a premium over international benchmark prices. An “import parity price” mechanism used by domestic producers allows them to price their goods just below the landed cost of imports. When customs duties or ADD are added to imports, the landed cost rises. Domestic producers then immediately increase their prices to match this new, higher benchmark price, thereby also increasing their profit margins.
Consequently, every dollar of duty imposed by the government transfers wealth directly from the pockets of an estimated 48,000 MSMEs that are fabricators of textile and apparel to the balance sheets of three corporate bigwigs manufacturing petrochemicals. As noted in a report published in NewsClick on October 21, 2022, written by one of the authors of this story, Ayush Joshi, along with Abir Dasgupta, this tussle represents a clear conflict between the profitability of a few and the viability of many.
Quality Control As A Weapon
The proposed anti-dumping duty is not an isolated measure; it is the latest salvo in a coordinated regulatory barrage. Before the current ADD proposal, the government deployed another potent tool: Quality Control Orders (QCOs).
Mandated by the Bureau of Indian Standards (BIS), these orders require foreign manufacturing plants to be certified by Indian inspectors to export to India. While ostensibly introduced to ensure safety and quality, QCOs act as formidable non-tariff barriers. The PTAIA notes that due to the application of QCOs on MEG, imports from “non-BIS countries” have already been effectively halted. This restriction severely curtailed supply from China, the world’s largest chemicals producer.
Price Hike Effect
The impact of the QCOs was immediate and tangible. Domestic MEG producers increased their prices by ₹1.5-2.0 per kg. This price hike was not driven by rising input costs (crude oil prices were stable during this period) but by the sudden reduction in competitive tension. The QCO effectively created a “walled garden” around the Indian market.
Now, the proposed ADD seeks to fortify this wall against the foreign suppliers from Saudi Arabia, Kuwait, and Singapore, who have managed to follow BIS standards. If implemented, the Indian textile industry will be effectively cut off from global markets, held captive to domestic pricing power. The walled garden ensures that domestic producers face virtually no external competition, allowing them to dictate terms to downstream users.
DGTR’s September Findings
The turning point in this saga was the issuance of “final findings” by the DGTR on September 23, 2025 (File No. 6/34/2024-DGTR). After months of investigations, the directorate released its recommendations, which sent shock waves to downstream users of MEG.
The DGTR recommended the following ADDs:
- Equate (Kuwait): $103 per MT (~₹9.00/kg)
- Sabic (Saudi Arabia): $113 per MT (~₹10.0/kg)
- Singapore: $137 per MT (~₹12.0/kg)
The DGTR’s rationale, standard in such investigations, relies on the concept of “material injury” to the domestic industry. This involves analysing metrics like price undercutting, suppression of domestic prices, and loss of market share.
The directorate’s final findings also addressed the “participation levels” of domestic MEG producers in its investigations. It noted that IGL had submitted all necessary data in accordance with the requirements of the “trade notice.” In contrast, while IOC extended its support to the investigation via a formal letter, the country’s largest government-owned oil refining and marketing company did not provide the granular financial and cost data required for the injury assessment. As a result, the investigation proceeded with IOC being treated solely as a supporter rather than a participating domestic producer.
Industry experts and user associations argue that the DGTR’s analysis is fundamentally flawed in the context of the MEG market in India. First, the directorate ignored the “capacity constraint” argument. Domestic manufacturers of the MEG industry cannot “lose” market share if they do not physically have the capacity to supply the product. With a 40 per cent gap between demand and supply, imports become a “necessity”, not a competitive displacement.
Second, the “profitability” argument is tenuous. RIL and other domestic manufacturers of petrochemicals have reported robust profit margins in refining and petrochemical production. The “financial injury” claim is difficult to reconcile with the public financial statements of the three companies, RIL, IOC and IGL. These companies do not report segregated profit data from particular products or divisions.
For instance, although RIL is a single corporate entity (the largest privately owned one in India), for all practical purposes, it operates as if it is a conglomerate manufacturing a very wide range of products under a single umbrella-like entity. The profit margins of the parent entity are known to all, but not how much comes from individual product lines. However, such information can surely be obtained by government agencies, that is, if they want to “lift the corporate veil”.
Third, the DGTR appears to have overlooked the “captive insulation” factor. As mentioned, 60 per cent of the domestic production of MEG is used for “captive” purposes. The apparent “injury” to, say RIL, is only being assessed on its merchant sales, ignoring the holistic health of the integrated entity. This selective analysis paints a misleading picture of the vulnerability of downstream users of MEG.
Finance Ministry’s Dilemma
The DGTR’s recommendation is with the Union Finance Ministry for final notification at the time of writing. This is the final hurdle to be crossed. Historically, the Finance Ministry has occasionally exercised its discretion to reject DGTR’s recommendations, as was seen in the case relating to the DGTR’s recommendations to impose ADD on PTA imports in 2020.
The current lobbying blitz by PTAIA, the Northern India Textile Mills Association (NITMA), CITI and other associations is aimed squarely at influencing Finance Minister Nirmala Sitharaman. The associations are urging the Finance Ministry to reject the DGTR’s findings, framing its decision not as a trade remedy but as a choice between corporate protectionism and the survival of MSMEs employing crores of workers.
The GST Contradiction
The government’s policy approach appears deeply fractured, with its left hand seemingly unaware of what the right hand is doing.
- Ministry of Textiles: This ministry, which has been working to boost the working of this sector, recently celebrated the reduction of GST on MMF, yarn, and filament to 5 per cent. This move was heralded as a “major” move to boost demand for textile products and make these more affordable for the “common man”.
- Department of Commerce (DGTR) in the Ministry of Industry and Commerce: The directorate in this department is proposing the imposition of duties that will increase raw material costs by nearly 20 per cent.
The associations named argue that the proposed ADD will “entirely neutralise” the benefit of the GST rate cut. Consumers will see no reduction in prices, as any tax savings will be offset by higher raw material costs. For downstream entities, particularly MSMEs, profit margins will remain flat at best and may even contract. The beneficiaries would be RIL, IOC and IGL, the upstream producers of petrochemicals who capture the profits that should have been passed on as benefits to the consumer.
PLI Paradox
The government has also launched an ambitious PLI scheme to boost textile manufacturing, targeting an investment of ₹20,000 crore and the creation of three lakh jobs. The goal is to make India a global textile hub rivalling China and Vietnam.
However, by inflating the cost of the primary raw material, MEG, used by this sector, by 20 per cent, the government renders the downstream industry uncompetitive before new factories can be built. Investors who committed to the PLI scheme based on projections of global raw material parity are now facing a bait-and-switch scenario. The NITMA has explicitly warned that these planned investments are now at risk of “derailment”. Why would an investor build a factory in India to export garments if the raw material cost is 20 per cent higher than in Vietnam?
Export Target Myth
The Ministry of Textiles has set an ambitious target of $350 billion for the textile trade by 2030, with $100 billion coming from exports. Achieving this requires a massive structural shift from cotton (where yield growth is stagnant) to MMF (polyester), which now dominates 72 per cent of global consumption of fibres.
Even as India’s polyester chain is being systematically hobbled by these duties, competitors in China and Southeast Asia access MEG at international prices (~$540/MT). If an ADD is imposed, Indian exporters of textiles and apparel will be forced to pay the international price plus the ADD plus import premia (~$670/MT). In the highly competitive global garment export market, where margins are measured in cents, this disparity ensures that Indian goods will be priced out of shelves of stores in the US and Europe, our sources contend, adding that the export target that has been set for 2030 would be impossible to achieve.
Collateral Damage on MSMEs
The textile industry already suffers from a fiscal anomaly known as the “inverted duty structure.”
- Input Tax: GST on MEG is 18 per cent.
- Output Tax: GST on Fibre/Yarn is 5 per cent.
This means manufacturers pay more tax on their inputs than they collect on their output, leading to a perpetual accumulation of tax credits that locks up vital working capital. Adding an ADD exacerbates this cash crunch. The ADD is a cost that cannot be claimed back as a credit; it is a hard cost that hits the bottom line directly. For MSMEs with limited liquidity, this additional burden is often the last straw that breaks the camel’s back, claims an insider who spoke on condition of anonymity, like others who did not want to antagonise either the government or the corporate bigwigs making MEG. Only representatives of associations made available to us the letters they had written to government officials.
The textile sector is India’s second-largest employer after agriculture, and one estimate is that the imposition of an ADD could jeopardise the livelihoods of not just millions of workers but also threaten the creation of 3 lakh new jobs envisaged under the PLI scheme.
MSMEs lack the financial cushion of the upstream corporate makers of MEG. Unlike RIL, which can theoretically offset losses incurred in the manufacture of petrochemicals with profits from refining crude oil to make products like petrol, diesel, kerosene, liquified petroleum gas (LPG) or aviation turbine fuel, or from its retail business, a standalone spinning mill in Coimbatore, for instance, has no hedge against losses. If MEG prices spike, the spindles stop spinning, and the workers are sent home.
NITMA President Siddharth Khanna notes that “many unit owners are ready to hand over the keys of their factories” because production at such high costs is simply not possible. The fear is not just of lower profit margins, but of the closure of factories.
Impact Not Linear But Multiplier
The impact of a ₹12 per kg increase in MEG will not be linear; it spreads across the value chain, creating a multiplier effect on inflation (see graphic 5).
A ₹12 hike in costs at the port becomes an ₹8 hike on the retail shelf. In the price-sensitive mass market, this kills demand and shifts consumption to cheaper alternatives or imports.
Historical Context (2014-2025)
- 2014-2019: ADD imposed on PTA. RIL benefited. Downstream units suffered.
- February 2020: Union Budget revoked ADD on PTA in the “public interest”. Finance Minister Nirmala Sitharaman acknowledged availability of raw material at competitive prices was crucial.
- 2020-2024: Industry enjoyed relative stability in terms of PTA prices, but battles over MEG began as RIL, IOC and IGL sought new forms of protection.
- 2024-2025: ADD investigation on MEG re-initiated. DGTR recommended duties in September 2025. The cycle restarted.
Once protection is removed from one input (PTA), the focus shifts to the other (MEG). The objective is the same: protect upstream companies.
Investments At Risk
The economic fallout, as submitted by the PTAIA to various government officials, quantifies the risks to future investments (see graphic 6).
Shortage Reality
The domestic MEG manufacturing industry’s inability to meet demand is the most damning evidence against ADD.
Installed capacities in million metric tonnes per annum (MTPA)
- RIL: ~1.7 MTPA
- IOC: ~0.7 MTPA
- IGL: ~0.1 MTPA
- Total Installed Capacity: ~2.5 MTPA
- Total Demand: ~3.1 MTPA
Industry associations estimate that even if every Indian plant operated at full capacity around the clock, the country would still exhaust its MEG supplies by September each calendar year.
Geopolitical Gamble
The countries targeted by the proposed ADD–Saudi Arabia (Sabic), Kuwait (Equate), and Singapore–are not just random trading partners; they are crucial strategic allies for India. Saudi Arabia and Kuwait are important suppliers of crude oil to India; the country imports nearly 90 per cent of its total requirement of crude oil, and they are vital partners in the country’s energy security architecture. As an important financial hub, Singapore is a key pillar of India’s “Look East” policy.
Initiating trade wars with these nations over a commodity in short supply may carry diplomatic risks. It has been reported that whereas Saudi Arabia was dropped from the DGTR’s investigations initially, it was later targeted again. This on-again, off-again targeting suggests the investigation process may have been driven more by corporate lobbying than by consistent economic principles or diplomatic strategy, according to a source.
China Factor
China accounts for more than half (55 per cent) of the world’s polyester production. Chinese users buy MEG when prices are low and benefit from government subsidies. Because Indian MEG prices are artificially inflated, China effectively gains a higher share of the world market for textiles and apparel.
If the ADD is put in place, Indian garment makers will find it cheaper to import finished fabric from China than to produce it domestically using expensive Indian MEG. Thus, a measure ostensibly designed to protect the domestic petrochemicals industry will end up damaging, if not destroying, the country’s textiles and apparel sector while simultaneously boosting Chinese exports. “It is a perverse outcome where protectionism achieves the exact opposite of its intended goal,” our source argued.
3.
UNITED WEAVERS’ LAST STAND
Recognising an existential threat, the otherwise fragmented textile industry in India has coalesced into a united front. Associations that rarely collaborate have united to fight against the ADD. The coalition includes: CITI, Southern India Mills’ Association (SIMA), PHD Chamber of Commerce and Industry, PTAIA, NITMA, Textile Association (India) (TAI), Southern Gujarat Chamber of Commerce and Industry (SGCCI).
In addition, the signatories to the correspondence sent to various government ministries, departments and agencies include: Schiffli Embroidery Manufacturers Association (SEMA), Panipat Dyers’ Association (PDA), Amritsar Dyers’ and Industrialists’ Association (ADIYA), Federation of Indian Art Silk Weaving Industry (FIASWI), Panipat Yarn Dealers Association, Hosiery Manufacturers and Exporters Club (HMEC), Young Entrepreneurs Society (YES), Denim Manufacturers Association (DMA).
Representatives of the 15 associations have synchronised their lobbying effort, meeting senior government officials including Revenue Secretary Arvind Shrivastava, Chemicals and Petrochemicals Secretary Nivedita Shukla Verma, and Textiles Joint Secretary Padmini Shingla, among others.
Questionnaires
On the evening of December 4, the writers of this article emailed questionnaires to top officials in RIL, IOC, IGL, DGTR, and the Union ministries of Commerce and Industry, Textiles, and Chemicals and Fertilisers, including Union Finance Minister Nirmala Sitharaman, Minister of Textiles Giriraj Singh and Minister for Chemicals and Fertilisers Jagat Prakash Nadda.
This article will be updated as and when we receive responses from them.
Quick Recap
When the dots are connected, the facts seem stark:
- Structural Deficit: India needs MEG imports.
- Price Data: Imports are not cheaper than domestic supplies; in many cases, they are more expensive.
- Beneficiaries: Only three major companies benefit from anti-dumping duties.
- Victims: Thousands of MSMEs and end-consumers suffer.
- Policy Conflict: The proposed ADD contradicts the intentions of cuts in GST, the goals of PLI schemes, and will not boost exports.
A bulky file on this contentious subject rests on the Finance Minister’s desk as we write this article. What will her decision be?
For the spinner in Ludhiana and the weaver in Surat, the price of this policy will be measured not in rupees but in the form of shuttered factories, lost jobs, and shattered dreams. Or so claim representatives of the associations mentioned.
They say the Finance Ministry stands at a critical policy crossroads. If it approves the DGTR’s recommendations, it helps RIL, IOC and IGL but risks the viability of tens of thousands of downstream textiles and apparel-making units, thereby jeopardising the livelihoods of an estimated six crore workers. Potential future investments in this sector may flee to Vietnam and Bangladesh.
What will Nirmala Sitharaman do?
Till the finance minister’s decision is made, the looms of Surat and the spindles of Ludhiana wait in uneasy silence. Will economic logic prevail over corporate influence? Time will tell.
GRAPHIC 1
INDIA’S TEXTILE ENGINE: WHY IT MATTERS
Economic Backbone
• 2.3% of India’s GDP
• 13% of total industrial production
• 12% of national exports
Export Story (FY 2024)
Total Exports: US$34.4 billion
Breakdown:
• 42% – Apparel
• 34% – Raw & semi-finished materials
• 30% – Finished non-apparel goods
Employment Generator
• 4.5 cr people employed directly
• 1.5 cr more employed indirectly
• Strong women, rural India participation
MSMEs at the Core
• 80% of manufacturing capacity housed in MSME clusters nationwide
GRAPHIC 2
POLYESTER ECOSYSTEM: THE DOWNSTREAM MAP
PET Chip Manufacturing
• 6 units producing poly-ethylene terephthalate (PET) chips
Yarn Manufacturing
POY/FDY (Partially Oriented Yarn / Fully Drawn Yarn):
• 22 units
FDY/IDR (Fully Drawn Yarn / Industrial Yarn):
• 21 units
DTY (Drawn Texturised Yarn):
• 275 units
Textile & Fabrication
• 1,823 spinning mills
• ~1,400 looms
Total polyester downstream units: 3,547
Garmenting Footprint
• ~2,700 garment manufacturers
• ~48,000 fabricators
Employment Impact
• Entire MMF value chain (PET chips, garments) supports ~6 crore jobs
• Includes clusters of spinners, weavers, fabricators, yarn processors, apparel manufacturers
Source: Polyester Textile Apparel Industry Association (PTAIA)
GRAPHIC 3
MEG DEMAND-SUPPLY MISMATCH (projected for 2025-26)
Installed Capacity
26.04 lakh MT
Actual Production
19.41 lakh MT
Total Consumption (Demand)
31.00 lakh MT
Shortage / Import Requirement
11.59 lakh MT
Source: PTAIA
GRAPHIC 4
MEG PRICE COMPARISON
(2024 average landed prices in India, including CIF — cost, insurance and freight)
|
Supplier |
Price (USD/MT) |
Premium over China CFR |
|
ICIS CFR China (Global Benchmark) |
538.3 |
0.0 |
|
RIL (Domestic Producer) |
541.6 |
+3.3 |
|
MEGlobal (International Supplier) |
543.3 |
+4.9 |
|
Sabic (Saudi Arabia) |
544.8 |
+6.5 |
Source: PTAIA
GRAPHIC 5
CASCADING IMPACT: How MEG Duty Pushes Up Polyester Prices
|
Stage |
Input |
Cost Impact |
Result |
|
Raw Materials |
MEG (30% of Polymer) |
+₹12.00/kg |
Polymer cost rises ~₹4.00/kg |
|
Intermediate Products |
Polyester Staple Fibre (PSF) |
+₹4.00/kg + profit margins |
Yarn cost rises ~₹5.50/kg |
|
Finished Goods |
Fabric/Garment |
+₹5.50/kg + Waste factor |
Final product cost rises ~₹7-8/kg |
GRAPHIC 6
ECONOMIC FALLOUT: HIDDEN COSTS OF MEG DUTY
1. Planned Investments at Risk
₹20,000-₹30,000 cr in expansion and modernisation may stall
2. Employment Shock
3 lakh potential PLI-linked jobs at risk
3. MSMEs Hit
~40,000 downstream small manufacturers will be directly impacted
4. US Tariff Double Whammy
India already faces 50% US tariffs; ADD to deliver another blow to export competitiveness
(Ayush Joshi and Paranjoy Guha Thakurta are independent journalists)
