The Union Budget 2015-16 has nothing for the Indian textile industry as it failed to consider the demands put forth by the industry. The industry has expressed disappointment over the budget announcements as the major demands have not been met.
The industryâ€™s wish list submitted prior to the Budget announcement included:
Cut in duties to ensure that raw material costs, cost of converting raw material into finished goods as well as the tariff are less than or equal to international prices,
Reduction in excise duty from 12 per cent to 6 per cent, and
Removal of anti-dumping duty to enable the industry and products become globally competitive.
Lowering of excise duty on man-made fibre (MMF) / filaments from 12 per cent to 4 per cent to boost growth
Cap interest rates for exporters at 7% to encourage investments
While none of the demands were considered by the finance ministry, the budget expects the economic growth in 2015-16 between 8 to 8.5 per cent with an aiming of touching double-digit rate very soon. According to the Central Statistical Office the GDP growth for 2014-15 is estimated at 7.4 per cent as per the new series for GDP. This higher growth will indirectly boost demand for textile products and consequently support the industry.
Prem Malik, Chairman, Confederation of Indian Textile Industry pointed out that the allocation for the Technology Upgradation Fund Scheme had been cut to Rs 1,520 crore for 2015-16 from Rs 1,864 crore allocated for 2014-15. He further observed that payments under the scheme were pending for the last three quarters and the provision should have been doubled to disburse the arrears. The cut will also not encourage investment in the sector.
Meanwhile, T. Rajkumar, Chairman, Southern India Millsâ€™ Association reportedly that the government had extended the optional Cenvat route for cotton textiles this year too, but did not consider some of the major demands of the textiles and clothing sector. This included removal of import duty and reduction in Central Excise on man-made fibres and allocation of adequate funds for the ongoing and pending projects under the Technology Upgradation Fund Scheme. He also wanted the six per cent excise duty on shuttleless looms to be removed.
Although India is self sufficient in textile industry, its share in the world market is only 4 per cent as against 35 per cent of China. In order to gain more market share, the need is to focus on scaling up operations through investments in mega textile parks which can be single point manufacturing and disbursing centres for export demand, say industry experts.
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