Union budget 2018-19 will have positive impact on apparel industry
Finance minister Arun Jaitley presented Union budget 2018-19 in Parliament on February 1. Fibre2Fashion spoke to representatives of various textile apparel bodies in the country to get their reactions.
CITI welcomes the budgetary allocation for textile sector of Rs 7,148 crore in the Union Budget 2018-19 and the announcements pertaining to the MSME sector. However, it is a big disappointment for the industry that its recommendations to increase import duty across the value chain have not been addressed.
Basic custom duty (BCD) on silk fabric has been increased to 20 per cent from 10 per cent. This would save the industry from dumping from China. The industry is facing higher imports post GST across the value added segment and was seeking increase in BCD across yarn and fabric, hence, disappointed with this partial measure.
The minimum support price (MSP) of all crops is to be made 1.5 times that of the production cost. This will benefit cotton farmers, but will result in high inflation for the consumers (as cotton constitutes 70 per cent of the consumption) and the downstream segments. This would also make our industry uncompetitive internationally.
The general focus of the budget is on rural economy, including significant fund allocations. This would help in pushing up demand for apparel in the domestic market. Further, the added emphasis on infrastructure development would also benefit the industry, as apparel manufacturing involves significant domestic transportation of raw materials as well as finished goods and infrastructural bottlenecks have been hindering this industry.
Finance minister has enhanced the turnover limit from Rs 50 crore to Rs 250 crore for eligibility to the reduced corporate tax rate of 25 per cent. A large number of units in the apparel sector would benefit from this. The enhanced economic growth envisaged in the budget will help in improving demand for apparel, which is one of the primary needs of the masses. The positive impact of the budget on the apparel industry will also be reflected in job creation, since this is the most labour intensive industry in the country.
The budget has increased funds allocation under the TUF Scheme from Rs 2,013 crore in 2017-18 to Rs 2,300 crore for 2018-19. This is a positive step and will help in clearing some of the committed liabilities under the scheme.
With regard to export marketing, the department of commerce will be developing a National Logistics Portal as a single window online marketplace to link all stakeholders. This is a positive step as it will provide marketing support to the small and medium sized exporters, besides reducing transaction cost.
The scheme for MSMEs to address the issues relating to NPA norms and stressed assets is a welcome step, as it has been a long pending demand from the industry. Extension of 12 per cent EPF employer’s contribution for the first three years of employment and also the fixed term employment for all the sectors of the industry would encourage job creation in the textile industry.
More than 80 per cent of the textile units would benefit due to the reduced corporate tax rate for units having up to Rs 250 crore annual turnover. This would help them to plough back the amount for creating additional jobs and value addition.
The Union budget has allocated Rs 2,164 crore for Remission of State Levies (RoSL) as against Rs 1,855 crore allotted last year for exports of garments and madeups. This amount is inadequate as there is huge backlog even for the year 2017. Timely disbursement of government dues is very much essential to ensure adequacy in working capital and achieve a sustained growth rate in exports and job creation.
Published on: 03/02/2018
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.