The solution for supply of cheaper cloth to the garments manufacturers would be removal of anti-dumping duty on imported yarn and also the local spinners should agree to supply a portion of their yarn at international prices to the local cloth manufacturers who have agreement to supply man-made fabrics to garment/made-up manufacturers for export. Such a sale may be termed as export for the supplier.
The subject of technical textiles is in the news for quite some time now and Government of India is pushing hard to promote production and usage of technical textiles. Whilst apparel production to a large extent is stagnated, the technical textiles have noticeably increased in importance due to their broad product and application range. Amongst the range of technical textiles products, India agro-textiles market is estimated at Rs.1, 300 crore by 2012-13. In the words of Mrs. Rita Menon, Secretary (Textiles) the application of technical textiles in agriculture will help to bring in the second green revolution in Indian agriculture.
Government has already selected Synthetic & Art Silk Mills' Research Association (SASM I RA) as the Centre of Excellence for agro-textiles to provide one stop facilities for testing, and research and development. Maganlal H. Doshi, President, SASMIRA and his team needs to be congratulated in this matter. Government has constituted a Development Council for Technical Textiles, which is headed by Arunbhai Jariwala, Chairman, FIASWI.
National Fibre Policy
I am happy to observe that Government of India has taken note of the fact that man-made fibre industry has been left far behind vis a vis the cotton industry. Ministry of Textiles is in the process of formulating a 'National Fibre Policy' with a view to achieve a growth rate of 7 to 8% for the textile industry. As per their record, the fibre consumption is in the ratio of 57:43 between cotton and man-made fibres in contrast to the 40:60 ratio prevailing world wide. The endeavor of the Government is to bring a balance between cotton and non cotton fibres closer to international trends.
Already sub-groups have been set up for different fibres. Arunbhai Jariwala is included in the Sub Group of Manmade fibres.
State VAT (Sales Tax) On Fabrics and Levy of Proposed GST on Textiles
It needs to be noted that manufacturing of fabrics in the decentralized sector does not take place in one State. Yarn is manufactured in one State, grey cloth is woven in another State, processing of fabrics is done in third State, cloth is sold in fourth State and has to go to fifth or sixth State, if it could not be sold earlier. Hence, the issue of likely imposition of VAT Sales Tax on fabrics is of great importance to the textile industry.
If VAT Sales Tax is imposed on fabrics, the problem of imposition of tax regulation will result, once again, in wide non-compliance as it happened when Excise Duty (Central VAT) was introduced in Budget 2003-2004. This is bound to happen, because, not only there are more than 17 lakh powerlooms in the country, but, also more than 1,000 independent process houses and more than 25 lakh traders of fabrics all over India.
- Limit of 15% and 20% capital subsidy should be increased from Rs.1 crore to Rs.5 crore and semi-automatic and two-for-one machinery which are excluded in the new scheme should be included.
- The capital subsidy for machinery for technical textiles should be increased from 10% to 20%.
- All the banks have received the subsidy money for release to the customer. In several cases the banks are unable to credit the same to customers because SIDBI is still not releasing ECA code number of their application which should be expedited.
The author is President of SASMA
Originally published in The Stitch Times: December 2009