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Web Exclusive | June 2014

SOS to Textile Minister

Cut excise, interest rate: SRTEPC

The SRTEPC has played a transforming role over the years in promoting exports of Indian Man-made fibre textiles. Exports of these items which were negligible in the 1960s, have grown substantially to touch Rs. 34,518 crores (US$5.75 billion) during 2013-14. The MMF textiles industry contributes 17% of the total Indian textile exports and this share is growing. India is the sixth largest exporter of MMF textiles in the world. The target for exports of Indian MMF Textiles during 2014-15 has been fixed at US$ 6.6 billion and the Council envisages exports to the tune of US$ 9 billion by the end of the 12th Five Year Plan (2016-17).

The council's wish list for the Textile Minister's consideration is as follows:

1. Reduction in Excise Duty on Man-Made Staple Fibres of Chapter 55 and  Filament Yarns of Chapter 54
Reduction in Excise Duty on Man-Made Fibres from existing 12% to 6%. This will ensure Duty neutrality and play a major role in reviving MMF Textile Industry and thus exports. High excise duty on man-made fibres has come in the way of growth of domestic consumption and exports.

2. Lending for Exports at 7%
Interest rates to be capped at 7% for exporters. The cost of Rupee Export finance in India is around 11 to 15 %, as against less than 2 % in the US and Europe and below 5 % in much of the ASEAN bloc. A successive increase in rates has made Indian exports less competitive

3. Interest Subvention Scheme
Expansion of interest subvention scheme to entire MMF textiles sector will help all the member exporters to avail this scheme and will go a long way in improving export competitiveness.

4. Best FTA treatment  to SEZ units
At present SEZ units attract full customs duty to sell in DTA.  However, India has FTA's with several countries and goods are allowed to be imported from these countries either duty free or at concessional duties.  Duty structure for Indian SEZ's should be at par with best FTA rates so as to make a level playing field with FTA countries.

5. Special Additional Duty (SAD) on MMF
4% SAD on all Man-made fibres should be abolished.  Imports are negligible and thus there will be no revenue loss to the exchequer.  SAD unnecessarily inflates import parity prices applied by the domestic manufacturers.

6. Central Excise Registration for Merchant Exporters
Central Excise registration is not available to merchant exporters at present. Merchant exporters, especially those who get job work done cannot avail Cenvat credit of duties paid on inputs such as fibres, yarns, fabrics etc. used in the export products thereby eroding their competitiveness. The consideration of the CE registration for merchant exporters will help majority of members of this Council, who contributes to the exports of Synthetic textiles items and will be at a level playing field   vis.a.vis manufacturer exporters and will also boost their export activities.

7. Reduction in the Rate of Service Tax
Service tax rate has been increased to 12.36% which is too high. Rate of Service Tax may be reduced from 12% to 8% which will help in increasing competitiveness of exports of Indian MMF textiles.

8. Power costs reduction
In Western India, power costs have gone up substantially. There is power shortage to the extent of 30-40% in southern India. Govt. may intervene and make available uninterrupted power supply at subs

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