Mr. Naresh Mistry, President of the Indian Textile Accessories & Machinery Manufacturer’s Association (ITAMMA), has made the following observations in regard to the provisions for the textile engineering industry (TEI) in the Central Budget for 2013-14 presented by the Finance Minister, Mr. P. Chidambaram:
* A new scheme called the Integrated Processing Development Scheme will be implemented in the 12th Plan to address the environmental concerns of the textile industry.
* Bringing green revolution to eastern India with an allocation of Rs. 1,000 crores in 2013-14 is welcome. (ITAMMA has already taken initiatives in regard to sustainability and expects that machinery and accessories manufacturers will invite developments related to energy conservation and environment-friendly aspects).
The zero excise duty at the fibre stage in the case of cotton might have brought relief to the readymade garment industry. However, one should not forget that man-made textiles is also important in case of readymade garments when it calls for frequent changes in design/fashion, and also in case of green revolution where recycled fibers play a vital role. Thus the duty of 12 per cent at the fibre stage in case of spun yarn made of man-made fibre may discourage its applications as mentioned and further will have an adverse effect on R&D/innovations in this field.
* The Technology Upgradation Fund Scheme (TUFS) to continue in the 12th Plan with an investment target of Rs. 1,51,000 crores.
* Companies investing Rs. 100 crores or more in plant and machinery during April 1, 2013, to March 31, 2015, will be entitled to deduction of an investment allowance of 15 per cent of the investment. (Pre-owned machines should have been exempted from the eligibility under TUFS as it affects the local TEI development adversely). Since used machinery is very cheap, there is no need for concessional financing to improve its feasibility, or else India will be a junkyard for second-hand machines.
* The Ministry of Corporate Affairs to notify that funds provided to technology incubators located within academic Institutions and approved by the Ministry of Science and Technology or the Ministry of MSME will qualify as CSR expenditure.
* An amount of Rs. 200 crores to be set apart to fund organizations that will scale up S&T innovations and make these products available to the people.
* A grant of Rs. 100 crores each made to four institutions of excellence.
* It is proposed to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 per cent to 25 per cent. This clearly indicates that the Government wants to encourage and support in-house R&D. However, it may noted that the Indian industry is far behind in meeting the R&D infrastructural needs when compared with the international textile machinery manufacturers. So it would have been a wise decision to promote transfer/acquisition of new technologies/innovations and machinery, R&D as well as joint ventures with leading overseas textile machinery manufacturers.
There is also a need to see that institutions of excellence, apart from working on the developments in fiber, yarn, fabric and special finishes, should also give importance to the developments in textile machinery manufacturing. At the same time, some provision of funds for the development of the Common Facility Centre (CFC) for various clusters of the textile engineering industry would have helped in the development of machines and indigenization of spares, thus further helping in bringing down imports and providing state-of-the-art services and products at the national level.
ITAMMA had also recommended waiver of customs duty on machines brought to India for R&D purposes and their being sent back to the respective countries after appropriate research/trials. It may be noted that new technology machines coming to India not only to upgrade the knowledge of students and technicians but also to create an appropriate platform to emerging entrepreneurs should be encouraged. Presently the duty structure depends on the duration of these machines being kept in India.
* The decisions taken for the benefit of micro, small and medium enterprises are welcomed, including a provision of Rs. 2,200 crores during the 12th Plan to set up 15 additional tool rooms and technology development centres with World Bank assistance.
* The decision on allocating Rs. 1,000 crores for this scheme and targeting skilling 50 million people in the 12th Plan, including nine million in 2013-14, and further motivating youth to voluntarily join skill development programmes through the National Skill Development Corporation is most welcome.
* No change in the normal rates of 12 per cent in excise duty and service tax. This is a little disappointing. However, reduction in customs duty from 7.5 per cent to five per cent for textile machinery offers some scope for improvement in investments in this area.