Textile industry would like to see inclusion of cotton yarn under MEIS and IES
Finance minister Arun Jaitley will present India's first Budget after the July rollout of the Goods and Services Tax (GST) regime on February 1, 2018. Fibre2Fashion caught up with representatives of a textile body, an exporters’ association, a textile and chemicals company, a textile exporter, and a retailer to find out what they would expect from the Budget.
In the earlier budgets, the Government had decided and communicated that the rate of corporate tax which is currently @ 34.6 per cent will be brought down to 25 per cent in a phased manner to encourage the corporate sector. The same may be implemented for the welfare of the industry as a whole.
The deduction under Section 32AC of the Income Tax Act may be extended to all assesses and not restricted to companies alone.
The industry would like to see inclusion of cotton yarn under MEIS and IES benefits, extension of RoSL benefit for fabric, allocation of adequate funds to the ministry of textiles for releasing the TUFS subsidy within the given time frame to clear the arrears and also to meet the committed liability for the year 2018-19. Adequate funds may also be provided to clear the long pending TUFS subsidies of committed liabilities of over 9,000 cases as per the recommendations made by the Office of the Textile Commissioner based on the study report submitted by NABCONS.
Since the Centre has been strongly advocating investments in technical textiles, it is essential to revive around 79 nonwoven and technical textile projects listed as left out cases by providing necessary funds to revive these units from severe financial stress and create confidence in the minds of the investors.
Union Budget 2018-19 will be the last full budget before the 2019 general elections. Prime Minister Narendra Modi along with finance minister should take into consideration the slow rate of growth and take steps to spur the growth in manufacturing and infrastructure sectors.
Favourable policies and conducive environment will boost the investment cycle and create direct and indirect employment for a large section of the population. This coupled with certain tax rationalisation measures in the renewable power sector will enable investments in the wind and solar power sectors making it lucrative for the country. This will give a boost to the manufacturing sector and reduce India’s carbon footprint, which is in line with our PM’s commitment to the UN.
Looking at the earlier trend of budget allocation in the infrastructure sector, a 20-25 per cent higher allocation should not be an issue for the government. As far as enablers for the manufacturing sector are concerned, the expectation is that the finance minister should focus on big infrastructure projects such as Dedicated Freight Corridor, Bharatmala project and Sagarmala project. These projects will boost investment and serve as huge enablers for the manufacturing sector by bringing down the supply chain costs substantially.
On the micro level, the expectation is that the finance minister should give some legroom on taxation so that the industry can make some savings to reinvest in projects.
Over the last three years, the finance minister has kept a very tight fiscal discipline and it has paid rich dividends in the form of lower deficits and consequently lower inflation and interest rates. We expect the government to continue the focus. With demonetisation and GST already implemented and their affect monitored, expecting this one to be a budget which encourages big spending. Taxation is something which really needs to be revised. Direct taxes to go down, major reforms on the ease of doing business is required, and easy access should be given to credit capital.
Also, from a digital perspective, I expect more incentives on digital payments and would not be surprised if we also see some direct tax benefits for start-ups.
We would like the Union minister of finance to address the issues like exemption from payment of IGST on imported apparel accessories, expeditious release of refunds due to exporters, refund of accumulated ITC for job working units, permanent deletion of reverse charge mechanism under Section 9(4), fund allocation for Governmental Schemes like ATUFS, ROSL, etc., increase in fund allocation for Market Access Initiative Scheme, increase of Duty Drawback Rate to cover blocked Central taxes, increase investment limit for MSMEs, upskilling to knitwear garment workers, formation of Knitwear Board based in Tiruppur, Labour Law amendment, and incentive for job creation.
We are confident that the finance minister would address the issues stunting the growth of knitwear garment sector in the forthcoming Union Budget 2018-19.
At a time when overall exports from India are dropping and India is becoming less competitive due to reduction in exports benefits, we really hope the upcoming Budget 2018-19 will offer correctional measures to strengthen performance through incentivised packages. This can generate more employment as well.
Further, a policy push in favour of Special Economic Zones dedicated to textiles can help revive the units already operating there or those that have closed down due to unviability. Huge capital investments are at stake that has delivered no returns.
I hope changes and possible reduction in tax rates are brought about to get more individuals under the tax net for overall revenue increase. Reduction in tax percentages helps industries too. For startups, a better tax framework must be made available similar to investments in the equity market that draw no tax on long term capital gains.
Published on: 27/01/2018
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.