SIMA hails TUF allocation & utilization of Cenvat Credits
July 06, 2009 - India
The Indian textile industry which has been seriously affected due to the global melt down and other Central / State related issues was looking at a comprehensive relief package to revive from the recession and regain its competitiveness in the global market. The Union Budget 2009-10 announced by the UPA Government today has partially addressed the issues relating to the textile industry.
Dr K V Srinivasan, Chairman, SIMA has welcomed the increased TUF allocation of Rs.3,140 crores as against Rs.1090 crores allocation made last year. He said that the increased allocation would fully meet the backlog and also partially meet the TUF interest subsidy reimbursement for the current financial year.
He has said that this would greatly ease out the financial position of the textile mills, which are starving for funds. He has further said the industry had demanded for Rs.3500 crores allocation to fully meet the reimbursement of interest subsidy till March 2010.
SIMA Chief has also welcomed the reintroduction of 4% optional duty for pure cotton textile products which would facilitate the textile mills to avail accumulated Cenvat Credits on capital goods, spares and accessories, packing materials, dyes & chemicals and various other inputs.
Dr Srinivasan has appreciated the extension of 2% interest subvention on export credit upto March 2010. He has welcomed the abolition of commodity transaction tax and fringe benefit tax. Dr Srinivasan has also hailed the speedy refund procedure for getting back the service tax paid on export transactions. The direct exemption granted to the service tax paid towards GTA service and commission on foreign agents’ service is a welcome feature.
SIMA Chairman has also welcomed the increased allocation for integrated textile parks and also the announcement of two mega parks for handlooms and powerlooms. He has said that this would strengthen the textile value chain.
However, SIMA Chief has pointed out that 4% increase in the mandatory excise duty on man-made fibres, filaments and other raw materials would make synthetic fibres expensive and would become counterproductive for the country, which was aiming at increasing its share in the synthetic and its blended textile and clothing products in domestic and global markets. Dr Srinivasan has also mentioned that the 5% increase in MAT is a negative step in the Budget for the corporate textile companies which are making thin margins.
Dr Srinivasan has stated that though the Budget in general is a welcoming one for the textile industry, but with certain shortcomings which could have been avoided considering the acute crisis prevailing in the industry. He has further said that the industry was expecting some more benefits like reduced working capital cost, remedial measures for addressing power shortage particularly in States like Tamil Nadu which accounts for more than 1/3rd of thetextile trade in the country.
Dr Srinivasan hopes that the Union Commerce Minister, Mr Anand Sharma would address the long pending issues like refund of 4 to 6 per cent State levies, anomalies in the DEPB and duty drawback rates, etc in the forthcoming Foreign Trade Policy for different textile and clothing products to make the Indian textile industry to compete with the countries like China and Pakistan in the global market.