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Budget Reactions | April 2015

Textile industry demands ignored

The Indian textile industry, employing over 105 million people, has been pleading for several urgent measures relating to Technology Upgradation Fund (TUF) scheme, levies on man-made fibre duties, enhanced incentives under Focus Market Scheme to compensate partially, the disadvantages in the tariff rates for Indian textile products prevailing in various countries till the FTAs are finalised. The Union Budget 2015-16 has not considered any of the demands made by the industry and there is also undue delay in the announcement of the foreign trade policy which should have been announced earlier.

Against this background, a delegation from The Southern India Mills´ Association (SIMA) consisting of its Deputy Chairman, M Senthilkumar and SV Arumugam, immediate Past Chairman, Confederation of Indian Textile Industry (CITI) and past Chairman of SIMA and also Dr K Selvaraju, Secretary General of the Association met Santhosh Kumar Gangwar, Hon´ble Union Minister of State for Textiles (Independent Charge) in New Delhi on 13 March 2015 and submitted a detailed memorandum to the Hon´ble Minister and had a detailed discussion. The Hon´ble Minister, after giving patient hearing to the submissions, had assured to take up the matter with the Commerce and Finance Ministries to do the needful.

T Rajkumar, Chairman, SIMA has stated that the Indian textile industry is having enormous opportunities in the international market and is fully equipped to meet the growing demands of the international markets with adequate production capacity under the current scenario. He has added that the industry is also gearing itself to expand its manufacturing activities across the value chain taking advantage of the various schemes announced exclusively for textiles by the Central Government and the various state governments. He has stated that the industry which has achieved 11 per cent growth rate in the domestic sector and 16 per cent growth rate in the exports during the last five years has potential to double its growth rate if the right policies are in place.

Rajkumar has further stated that the industry had demanded an allocation of Rs 3,500 crore for the ongoing TUF schemes to meet the liabilities of the last three quarters of 2014-15 and also for the entire period of 2015-16. But the Union Budget has allocated only Rs 1,520 crore which may not meet the fund requirement for even 2014-15. Rajkumar has added that the industry had also demanded an allocation of Rs.3000 crore to meet the pending cases under TUF scheme including committed liability, left out cases and blackout period with effect from 1st April 2007 to sustain the financial viability of around Rs 65000 crore investments already made by the industry. Rajkumar has stated that the Hon´ble Minister has promised to take up the matter with the Ministry of Finance and ensured to allot adequate funds in due course.

SIMA chief has stated that it is essential to reduce the central excise duty on manmade fibre from 12 per cent to 6 per cent on par with cotton and also remove the 5 per cent import duty and 4 per cent special additional duty to enable the Indian textile industry to achieve a substantial growth rate in the markets of manmade textile products as this segment has not achieved any growth rate over a period. He has further stated that the industry also has demanded for 5 per cent interest subvention, reduction of margin money from 25 per cent to 10 per cent and increase the credit limit from 3 months to 9 months for the cotton working capital to bring stability in cotton prices, thereby enhancing the growth rate of cotton textile industry by 3-5 per cent and also ensure fair prices for the cotton farmers.

Rajkumar has said that the industry has sought for the removal of 6 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

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