Industry hails budget and says it will boost sector

Yesterdays Union Budget by FM Arun Jaitley has got positive response from the textile and garments industry. The overall feeling is that a lot of their expectations have been met. As Govind Shrikhande, Customer Care Associate and Managing Director, Shoppers Stop, points out that

every new innings requires a steady approach and resolve. “Especially so, when the economy is soft, global conditions are unpredictable and overall confidence is low. The Budget has five key focus areas, kickstart economic growth and infrastructure, taxation, multi-skilling and education, fiscal discipline and industry,” he avers, which have been addressed aptly in the Union Budget for 2014.

RMG exports get a boost

The FM also announced increasing import incentives for garment exporters and scrapping of basic customs duty on precious and semi-precious stones. “This will help increase exports and is a good boost for the industry,” feels Rahul Mehta, President of the Clothing Manufacturers Association of India. The government has fixed textile export target at 50 billion dollars (over Rs 3,00,000 crores) for the current year and around 40 percent of this consists of readymade garments. Experts feel that the move will also help Indian manufacturers to compete with other countries in getting more orders from global retail sourcing entities, such as Walmart. The industry says the move will help bring down the cost of readymade garments meant for export by 2 to 3 percent.

T Rajkumar, Chairman of the Southern India Mills’ Association (SIMA) thanked the government for extending the optional route of CENVAT on textiles, which was one of the demands of the industry till GST is implemented to maintain a level playing field. He also welcomed the announcement of exempting cotton transport loading and unloading services from the purview of service tax, which offers considerable relief to the industry and also to cotton farmers.

Tirupur Exporters Association President A Sakthivel welcomed the association’s requisition for increasing the duty free entitlement for import of trimmings, embellishments and other specified items from 3 percent to 5 percent of the value of their exports. He also highlighted the removal of customs duty from 5 percent to nil for import of specified inputs for manufacture of spandex yarn, which may help to reduce the spandex yarn manufactured domestically.

The government also removed basic customs duty on specified inputs for manufacture of spandex yarn, from 5 percent. “We were losing out to large players who were directly importing spandex yarn. We will now be at par with these companies,” said Y C Gupta, Head, Business and Operations, at Indo Rama Industries, a leading manufacturer of spandex, the stretch material used in finished products such as stretch denim, swimwear and leggings.

All trade bodies were unanimous in their praise for the decision to implement GST regime in a time bound manner, probably by the end of this fiscal year. They also welcomed the move to add 13 more airports and 14 more seaports for facilitating 24x7 cargo clearance which will increase competitiveness and for also exempting cotton transport loading and unloading services from the purview of service tax.

Textile clusters a good move

Prem Malik, Chairman of Confederation of Indian Textile Industry (CITI) hailed the proposal to extend investment allowance of 15 percent on investments of more than Rs 25 crores on plant and machinery and the proposal to develop an entrepreneur friendly bankruptcy framework for SMEs would be helpful to small units in the textiles industry. He however requested that the bankruptcy framework may also be extended to larger units.

However, Rajkumar noted that the garment sector was expecting an announcement of 3 percent interest subvention on packing credit, which expired in March 2014, in the Budget. That there was no mention of the continuance of interest subvention in the Budget was seen as a negative.

Manikam Ramaswami, Chairman of Texprocil opines that introduction of excise duty on polyester produced from waste is a serious retrograde step. Recycling of waste plastics and pet bottles into fiber helps waste realize a high enough price to encourage separation of this dangerous non bio-degradable waste from bio- degradable digest-able waste.

Harkirat Singh, Managing Director, Woodland sums up by saying, “With only six weeks to his credit, the FM has done a good job by emphasising on the manufacturing, infrastructure, housing and solar energy sectors in a big way. While few initiatives have been proposed, there have been no big bang announcements.”