SIMA hails measures for textile industry in stimulus package
The Indian textile industry has been passing through an unprecedented crisis during the last two years due to very many factors which started initially with sudden appreciation of rupee against US dollar, later steep increase in raw material coupled with poor off-take for textile products due to global recession, hardening of bank interest rate, steep reduction in export incentives, acute power shortage, etc.
The textile industry associations have been appealing to the Centre to announce suitable relief measures to revive the mother industry from the recession and sustain its survival and regain its competitiveness in the globalised environment.
The various relief measures sought by the industry include two year moratorium for repayment of loans and avoid NPAs, restore export incentives, relax banking norms, refund the Technology Upgradation Fund (TUF) Scheme interest arrears (over one year backlog), exempt fuels meant for power generation from all taxes and levies (considering the acute power shortage which is likely to continue for another three to four years), etc.
Now that the central government has announced several relief measures to stimulate the Indian economy, Dr K V Srinivasan, Chairman, The Southern India Mills' Association has thanked the Central Government particularly the Hon'ble Prime Minister who has taken sympathetic view of the grave situation of the textile industry and announcing various relief measures.
Dr Srinivasan has mentioned that the allocation of Rs.1,400 crores to clear entire TUF arrears and allocation of Rs.1,100 crores to clear CST/TED arrears, additional allocation of Rs.350 crores for export incentive scheme would greatly ease out financial position and help the textile mills to procure cotton during the cotton season.
He has added that 2% interest subvention on packing credits would give marginal relief while 4% is essential to compete in the global market and also considering the substantial increase made by Pakistan and China in the export incentives. He has further said that 4% cut in the ad valorem CENVAT rate across the board would help to reduce the cost of production considerably.
Dr Srinivasan has pointed out that the back-up guarantee for ECGC scheme, refund of service tax on foreign agent commissions upto 10% of FOB value, refund of service tax on output services while availing of benefits under duty drawback scheme would stimulate the exports.
He has said that the removal of import duty on Naphtha for the use in power sector would make the power cost competitive and would greatly benefit the industry which is facing acute power shortage particularly states like Tamil Nadu where the HT industry is currently facing over 70% power shortage.
He has appealed to the centre to exempt the high speed diesel oil meant for captive power generation from all taxes and levies since this is the only option available to states like Tamil Nadu where the power crisis is going to become worse and likely to continue for next three to four years.