Budget indifference to sectoral plight resented
The Indian textile industry, employing over 105 million people, has been pleading for several urgent measures related to the Technology Upgradation Fund Scheme (TUFS), levies on man-made fibre duties, and the incentives under the Focus Market Scheme to partly compensate the disadvantages from the tariff rates for Indian textile products prevailing in different countries, till FTAs are finalized. The Union Budget 2015-16 has not considered any of the demands made by the industry, and there is also an undue delay in the announcement of the new foreign trade policy.
It is in this background that a Southern India Mills’ Association (SIMA) delegation, consisting of Mr. M. Senthilkumar, its Deputy Chairman, Mr. S.V. Arumugam, immediate past Chairman of the Confederation of Indian Textile Industry (CITI) and past Chairman of SIMA, and also Dr. K. Selvaraju, Secretary-General of the Association, met Mr. Santhosh Kumar Gangwar, Union Minister of State for Textiles, in New Delhi on March 13. The team submitted a memorandum to the Minister and had a detailed discussion on the major issues facing the industry, at the end of which Mr. Gangwar gave the assurance that he would take them up with the Commerce and Finance Ministries.
In a press release, Mr. T. Rajkumar, SIMA Chairman, has stated that the Indian textile sector has had enormous opportunities in the international market and is equipped with adequate production capacity to meet the growing world demand. The industry is also gearing itself to expand its manufacturing activities across the value chain, taking advantage of the various schemes announced by the Central and State Governments. Having achieved 11 per cent growth in the domestic sector and 16 per cent growth in exports in the last five years, it has the potential to double the growth rate if the right policies are in place.
Mr. Rajkumar has further stated that the industry demanded an allocation of Rs. 3,500 crores for the ongoing TUF Scheme to meet the liabilities of the last three quarters of 2014-15 and also for the entire period of 2015-16. But the Budget has allocated only Rs. 1,520 croes which may not meet the fund requirement for even 2014-15. The industry also demanded an allocation of Rs. 3,000 crores to meet the pending cases under TUFS, including the committed liability, left out cases and the black-out period with effect from April 1, 2007, to sustain the financial viability of around Rs. 65,000-crore investments already made by the industry. The Minister promised to take up the matter with the Finance Ministry and ensured allotment of adequate funds in due course.
According to the SIMA chief, it is essential to reduce Central excise duty on man-made fibre from 12 per cent to 6 per cent to be on par with cotton, and also remove the five per cent import duty and four per cent special additional duty to enable the textile sector to achieve a substantial growth in the markets for man-made textile products as this segment is not faring well over a period. The industry also demanded five per cent interest subvention in margin money from 25 per cent to 10 per cent and increase in the credit limit from three months to nine months for working capital in order to bring stability in cotton prices, thereby enhancing the growth rate of the cotton textile industry by three-five per cent and also ensure fair prices for cotton farmers.
Mr. Rajkumar has said that the industry has sought removal of six per cent Central excise duty on shuttleless looms as the state-of-the-art technology looms are not manufactured in the country, and the imported looms become costly by 10.36 per cent due to six per cent countervailing duty and four per cent special additional duty. While the Government is giving 15 per cent capital subsidy or 30 per cent margin money subsidies for the smaller sector to encourage technology upgradation in the weaving segment, which is plagued with outdated technology affecting the value chain of the textile industry, the levy of six per cent Central excise duty becomes counterproductive. Shuttleless looms which were exempted from Central excise duty for several years were brought within the excise net in 2008.
The SIMA Chairman has stressed the need for an early announcement of foreign trade policy with a slew of measures for the textile sector. This is essential to grab the global opportunities currently available. Depreciation of the Euro against the Indian rupee has seriously affected the business, apart from the 9.6 per cent tariff disadvantage Indian textile products suffer from the European Union. India has already started losing its markets and orders, and countries like Pakistan which have duty-free access are grabbing the opportunities.
The Government can very well withdraw the incentive once the FTAs with the EU countries, the US, China, etc., are finalized and a level playing field created. It is also essential to have a relook at the EPCG scheme, remove the restriction of average export performance and conditions in the third party exports as overall exports have dwindled substantially from April 2014 onwards owing to the Chinese policy and the duty-free access agreements entered into by various competing countries, including Pakistan.
The delegation thanked the Minister for his sustained bid for reducing the cost of transport through coastal shipping by over 10 per cent. It also appealed for further efforts to reduce the cost by another 20-30 per cent.