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Textile trade bodies hail budget, retail reaction mixed

Feb '20
Finance minister Nirmala Sitharaman arriving at Parliament House to present Union Budget 2020-21 on February 1. Pic: PIB
Finance minister Nirmala Sitharaman arriving at Parliament House to present Union Budget 2020-21 on February 1. Pic: PIB
Leading Indian textile trade associations have welcomed several initiatives announced today in the budget, including a proposed National Technical Textile Mission with an outlay of ₹1,480 crore, abolishing anti-dumping duty on purified terephthalic acid (PTA), a review of rules of origin requirements under free trade agreements (FTAs) and allocation of ₹100 lakh crore for infrastructure development. The reaction of retailers was, however, mixed.

The budget has allocated ₹3,514.79 crore to the ministry of textiles against allocation of ₹4,831.48 crore in 2019-20 budget.

It was presented in the parliament by finance minister Nirmala Sitharaman, who also announced launch of a new scheme, called NIRVIK, to achieve higher export credit disbursement. The scheme offers higher insurance coverage, reduced premium for small exporters and simplified procedure for claim settlements.

Coimbatore-based Indian Texpreneurs Federation (ITF) said the decision on PTA, a key raw material for synthetic textiles, is a first step towards bringing structural changes in the raw material eco-system that will strengthen the Indian textile sector's dream of capturing a better market share in man-made fibres (MMF) and blended apparels. The Clothing Manufacturers' Association of India (CMAI) too felt the PTA decision will benefit sarees, dress materials, home furnishing, sportswear and technical textiles.

Coimbatore-based Southern India Mills’ Association (SIMA) chairman Ashwin Chandran said PTA attracts anti-dumping duty from $27 to $160 per metric tonne depending on the country of origin and India often faces shortage of PTA that curtails the capacity utilisation of the polyester segment industry.

Chandran also welcomed the announcement of addressing the inverted duty structure in the goods and services tax (GST) as the Indian textile industry has been suffering because of huge accumulation of inverted duty of capital goods and certain services.

The second big structural reform, according to ITF, is regarding brining suitable provisions in the Customs Act and reviewing the rules of origin requirements to ensure there is no dumping through the FTA route. This will help the textile sector in a big way to face the rising apparel import into the domestic market, it said.

Akhil Jain, executive director of retail brand Madame hoped the bigger chunk of the allocation for the National Technical Textile Mission must be utilised for skill development, technology and automation to generate higher efficiency for faster and cost-effective production.

The proposed financing of invoices of the micro, small and medium enterprises (MSME) sector could be a huge benefit for the textile and apparel industry, which is largely comprised of MSME units, according to former CMAI president Rahul Mehta.

Tiruppur Exporters' Association (TEA) feels the allocation of ₹100 lakh crore for investment in infrastructure will help reduce logistics costs, a hindrance for export competitiveness by apparel units. "The government's decision to ask RBI [Reserve Bank of India] to consider for extension of MSME restructuring till March 31, 2020 is the need of hour to bail out the struggling MSMEs in Tiruppur," TEA president Raja M Shanmugham said.

Welcoming the various budget initiatives that would benefit the textile sector, Cotton Textile Export Promotion Council (TEXPROCIL) chairman KV Srinivasan said the initiatives for the MSME sector like increasing the threshold for audit of books of account from ₹1 crore to ₹5 crore and provision to enable non-banking financial corporations to extend invoice financing to the MSMEs will also lead to ease of doing business for these units.

Retailers Association of India (RAI) chief executive officer Kumar Rajagopalan said the budget paves the way for both ease of doing business and a national policy for retail. Sanjay Vakharia, chief executive officer of Spykar Lifestyles, however, said the budget has nothing much to spur demand and consumption—a key expectation of the retail sector—except reduction in personal income tax.

Fibre2Fashion News Desk (DS)

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February 2020

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