Pre-budget wish-list of captains of textile sector
Each year towards the end of February, corporate India waits with bated breath for the announcement of the Union Budget which can build or mar fortunes of any sector. The textile and its allied sectors are no exception. The Central Budget over the last four years had provided significant relief to the textile industry by way of rationalizing the fiscal duty structure by reducing duties.
This year the textile and apparel sector is particularly worried as to whether the finance minister will withdraw the fiscal incentives announced in the previous year, which were announced as a measure to face the slowdown in the domestic as well as global markets, due to the economic turmoil. In order to sustain development, textile industry also expects the export policies to be more simplified with liberal excise and customs duty structure.
Fibre2fashion, in its attempt to understand the industry expectation from Union Budget, gathered views from manufacturers across the cotton and man-made fibre textile industry with respect to policy measures, exemptions on excise, export and import duties. Industry players have prepared their wish list for the forthcoming budget hoping that it will provide some concessions and help them to achieve their targeted goals effectively for the year 2010-11.
Mr Akhil Jindal, Director (Corporate Affairs) at the well-diversified Welpsun Group, had six major expectations from different areas. With regards to making the sector organized since a majority of the industry is unorganized, Mr Jindal was of the opinion that, textile sector being the largest employment provider, generating employment for 90 million people directly and indirectly, the Government should take steps to make this segment organized as the competitiveness of the Indian textile industry has been lost with the large presence of small companies in the value chain.
He observed that the TUF scheme should be extended so that textile companies may benefit from the low interest rate and also requested the government to allocate Rs.20 billion for meeting the backlog of the current fiscal year and a provision of Rs. 30 billion be made for the next fiscal year.
He demanded that the Government take steps to control cotton prices which have led to an increase in yarn prices, boosting fabric prices, which is forcing many clothing exporters to cut production and honour prior commitments at a loss. His logic is that if the Government proposes restriction on raw cotton exports, then the rise in cotton prices can be restricted to some extent.
Among other demands, Mr Jindal wants the government to provide enhancement of the DEPB drawback scheme benefiting the exporters in the country and in order to upgrade the competitiveness of our exports, it is requested that export credit for textile and clothing units may be provided at a uniform rate of 5% interest, both for pre-shipment and post-shipment credit.