Textile industry calls for cut in import duty on raw materials

The Northern region based textile industry sought enough provisioning for technology upgradation fund, rationalization of duty structure on man-made fibres and lowering of import duty on raw materials used in making finished products in the forthcoming Union Budget.

At present, man-made fibres attract 12.5% excise duty. The industry pitched for rationalization of duty structure on man-made fibres to enhance the sector’s competitiveness globally and increase its share in the global textile trade.

According to Harkirat Singh, MD, Woodland, textile being an essential item for the common man, textile items should be kept under GST with the minimum possible tax slab of 4-5%. Secondly, there are lots of raw materials like nylon and technical fibres which they wish to import from other countries and manufacture finished products here. However, high duty acts as a deterrent and instead they import finished products. So, the government must lower the import duty to promote “Make in India” initiative.

Tax on import of some of the raw materials was higher vis-a-vis tax on import of finished products. In Punjab, the textile industry accounts for 19% of the total industrial production and contributes around 38% of the total exports from the state. Punjab accounts for 14% of the total cotton yarn production in the country and is one of the leading exporters of yarn, hosiery and ready-made garments.

The MD of Ludhiana-based Vallabh Fabrics Ltd said that Punjab is one of the major states for textiles. The government must allocate some textile park for the state to give fillip to the sector. In addition to this, they demand that any new scheme by the Centre should be directly transferred to the textile players rather than through the state government as it only results in delay and confusion.

Due to demonetisation, there was a considerable slowdown in consumer demand for apparels in December. Ajit Lakra, MD, Superfine Knitters Ltd., said that they want some kind of relief from the government. Reduction in interest rates is a welcome step but there is a need to further lower it.

Also, there is a need to cut tax rates to widen tax net. Moreover, the customs duty on capital goods of textile industry should be reduced from 20-22 percent to 10 percent.

According to credit rating firm ICRA, increasing the allocation under the Technology Upgradation Fund Scheme (TUFS) to a level equivalent to average of actual releases over the past 3-4 years would be beneficial for the industry in order to attract capital investments in the downstream sectors (fabric-making and apparels), thereby facilitating higher value-addition in the country.