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Scathing reaction of textile & garment bodies to budget
17
Feb '09
The Interim Union Budget presented by the Finance Minister of India, will go down in history as the biggest letdown budget in the history of independent India. Most of the company honchos were looking forward to new stimulus measures, but their hopes were crashed when the Finance Minister completed his budget speech.

Except for the extension of interest subvention of two percent on pre and post shipment credit till September 2009, which was to expire from March 2009, there was nothing else in the budget to enthuse the textile and garment enterprises, which was looking up to the government to help them survive through this difficult period.

This in effect means that till the new government which is expected to be sworn in June announces the budget somewhere in July, the textile and garment export sector will have to fend for themselves from the second quarter of 2009 onwards and in a period in which the recessionary trends are expected to be at their peak in India.

The trade bodies have been scathing in their reaction to the announcement of the budget. Mr Rakesh Vaid, Chairman of the 6,600 exporting members strong, Apparel Export Promotion Council (AEPC), who is in Las Vegas representing India at the Magic Apparel Show had this to say in reaction to the declaration of the budget.

“The industry had hopes from the interim union budget for 2009-10 through an economic stimulus package. Collateral damage will be done to the readymade garment export industry unless drawback rates are increased“. He demanded a exemption from fringe benefit tax for exporters and benefits under section 80HHC of the Income Tax Act for at least five years.

In September last year, the government had reduced drawback rates for cotton apparel from 11 to 8.8 per cent, for blended apparel from 11.2 to 9.8 per cent and for synthetic apparel from 11.5 to 10.5 per cent. The AEPC has been demanding ad hoc increase by four percent from September 2008.

He added by saying that, “China has raised tax rebate for textile and garment exports from 14 to 15 per cent from February 1. Since August last year, it has increased the concession three times, with the last increase in November”, and also called for two per cent additional subvention in export credit to be reintroduced.

Dr.KV Srinivasan, Chairman, The Southern India Mills' Association (SIMA), said that the interim budget announced by the Government is totally disappointing for the textile industry. He has said that the industry was expecting bare minimum sops in the interim budget and a comprehensive package either in the forthcoming stimulus package or the next budget”.

He added by saying that, “The Government could have considered two year moratorium period for repayment of loans to avoid NPA's and working capital package for cotton purchase consisting of 7% interest rate, reduction of margin money from 25% to 10% and enhanced credit period to 9 months”.

SIMA Chairman further mentioned that, “The Centre could have exempted liquid fuels meant for power generation from Central Excise, Customs and other levies, considering the acute power shortage prevailing in the country, particularly in States like Tamil Nadu where the textile industry is facing over 60 percent power shortage”.

Fibre2fashion News Desk - India


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