'Economic package is half way travelled' - Mr Dalmia, CITI
The economic stimulus announced by Government on 7th December 2008 has provided some relief to the textile and clothing industry. However, Government has travelled only half the distance in meeting the urgent requirements of the industry, according to Shri R.K. Dalmia, Chairman of Confederation of Indian Textile Industry.
He stated that the major facilities given for textile and clothing sector are either by way of releasing withheld benefits or by way of restoring withdrawn benefits. In the case of TUFS and CST/TED payments, reimbursements which had been withheld for a long time will now get paid on the basis of the fund allocation provided in the Package. In the case of export credit, subvention of 4% had been withdrawn from October 2008, out of which 2% has been restored now.
Shri R.K. Dalmia added that, there are some new facilities in the case of service tax. Increase in refund of service tax on agency commission from 2% to 10% will help textile and clothing units, among others. Refund of post production service taxes to units availing drawback facility will also help the textile and clothing industry, according to CITI Chairman.
Shri Dalmia stated that some major requirements of textile and clothing industry have not been covered in the package. “Restoration of drawback rates which had been steeply reduced from September 2008 onwards, a moratorium of two years for repayment of principal amounts against term loans in view of the working capital problems of this loss making industry, and the restoration of the remaining 2% of subvention for export credit are the major requirements that need immediate attention.”
He added that the restored subvention should apply from 1st October 2008 – the date from which it had been withdrawn earlier. He also stressed the need for disposing of cotton procured by Government promptly to Indian mills at international prices, in order to avoid an artificial scarcity of cotton in the market.
CITI Chairman pointed out that the package does not address the serious problems of the cotton situation at all. Unreasonably high MSPs announced by Government have increased domestic cotton prices by 20% above international prices and the minimum that can be done at this stage is to enable mills to buy cotton.
"Providing working capital for purchase and storing of cotton at the interest rate of 7% as applicable to agriculture sector, against a margin of 10% as against 25% applicable now and for a period of 9 months as against 3-4 months applicable at present can make a significant difference to the entire cotton economy”, said Shri Dalmia.
He hoped that some of these issues will be addressed in the coming days and requested Government to consider these on top priority in order to ensure that the package can produce the desired results.
Confederation of Indian Textile Industry