Growth oriented budget for textile industry-SIMA

February 28, 2013 - India

The Indian textile industry, employing over 100 million people directly and indirectly has been looking for various schemes and assistance in the Union Budget 2013-14 to regain its global competitiveness which faced the worst ever crisis in its history during 2010-11 owing to an unprecedented volatility in the cotton prices and external factors. 

The government announced a debt restructuring package of Rs.35, 000 crores during May 2012 which has enabled the industry to manage its financial crisis. The production cutback in China and favourable domestic and international market conditions gave a new lease of life to the textile industry from the middle of 2012 and therefore, the industry is on a revival path.  

Mr. S. Dinakaran, Chairman, The Southern India Mills’ Association (SIMA) has expressed his gratitude and thanks to the Hon’ble Union Finance Minister and the UPA Government for favourably considering the various pleas made by the Association and addressing the various issues and extending several schemes / incentives in the 12th Five Year Plan period to make the industry to achieve a sustained growth rate.

Continuation of Technology Upgradation Fund Scheme (TUF Scheme) and Scheme for Integrated Textile Parks (SITP) to the 12th Five Year Plan period, zero excise duty on branded readymade garments and made ups, reduction in customs duty on the imported textile machinery and parts from 7.5% to 5%, increased grant of Rs.10 crores to the textile parks under SITP, investment allowance of 15% to manufacturing companies investing more than Rs.100 crore in plant and machinery during the period 1st April 2013 to 31st March 2015 are the major welcoming features of the Budget to the textile industry, said Mr. S. Dinakaran.

SIMA chief has stated that the Technology Upgradation Fund Scheme, a blue chip programme of the Ministry of Textiles which is in vogue from 1st April 1999, made the industry to attract over Rs.2.3 lakh crores of investments in this industry and today the industry has become globally competitive. 

He has added that the extension of the scheme in the 12th plan with an envisaged investment of Rs.1.51 lakh crores would enable the industry to improve its export performance substantially apart from fully meeting the clothing requirements of the entire Nation.  He has thanked the Hon’ble Finance Minister for allocating Rs.2400 crores for the financial year 2013-14 for the TUF Scheme.

Yet another blue chip programme of the Ministry of Textiles is the Scheme for Integrated Textile Parks (SITP), which has attracted investments in 42 parks across the Nation and another 21 parks have been recently approved. The various stakeholders of the industry had proposed several changes in the scheme including a major thrust for the power loom sector and textile processing which are the weakest links in the entire textile value chain.

Mr. Dinakaran has stated that special schemes for the power loom sector under TUFS and SITP, additional incentive for apparel units and a new scheme with an outlay of Rs.500 crores for the textile processing development with benefits up to Rs.50 crores per park would address the technology obsolescence issue and also the pollution issue which are the major threats for the survival of these sectors. Mr. Dinakaran has hoped that the global export share would substantially improve with these schemes in the 12th five year plan period. 

SIMA Chief has also thanked the Union Finance Minister for extending the optional route under Central Excise for various textile products from fibre to finished goods.  He has stated that this is essential till GST is introduced to maintain a level playing field across the value chain. 

He has specifically thanked the Minister for bringing the branded garments and made ups under optional route which were levied 10% central excise duty during 2010-11 and increased to 12% during 2012-13 budgets and seriously affected the domestic business particularly after signing free trade agreements with Bangladesh allowing duty free access for garments.  Mr. Dinakaran has stated that this step will greatly help the domestic industry to regain its competitiveness.

Mr. S. Dinakaran has stated that the reduction of customs duty on all textile machinery & parts thereof from 7.5% to 5% would give a competitive edge to the textile industry for modernization and would enable the industry to go in for state-of-the-art technology and remain globally competitive.   SIMA Chairman has appreciated the efforts taken by the UPA government for developing various industrial corridors and infrastructure facilities to reduce the transportation cost and transaction cost. 

Announcement of two new major ports in West Bengal and Andhra Pradesh, a fast growing States in textile manufacturing activities and expansion of Tuticorin port capacity by 42 million tonnes would greatly help the textile industry in Tamil Nadu to improve its business and exports substantially.

SIMA Chief has also hailed the reintroduction of generation based incentives for the wind energy projects and allocating Rs.800 crores to the Ministry of Non-Renewable Energy which would greatly help the States having wind mills, particularly Tamil Nadu which accounts for more than 45% of the wind generation capacity to improve their competitiveness on power front.

The allocation of Rs.1000 crores for National Skill Development Corporation (NSDC) for skill up gradation would enable the industry to improve its competitiveness. SIMA Chief has stated that the textile industry is one of the major beneficiaries under the sector skill development of the NSDC programme.