Don’t miss the latest developments in business and finance.

Home / Content / B2B Connect / Manufacturing Industry / Budget should consider special package for textile industry

Budget should consider special package for textile industry

TUFS must be extended for another 5 years to enable companies to avail maximum benefit

Budget should consider special package for textile industry
Premium
Deepak Chiripal
Last Updated : Jan 27 2017 | 3:36 PM IST
Connect with us
Facebook IconLinkedIN Icon
Textile industry is one of the largest employers in India and contributes about 14 percent to industrial production, 4 percent to the GDP and gives direct employment to around 45 million work force. The industry has gone through lot of difficulties post demonetisation and needs special attention in the budget.

Introduction of GST, reduction of interest rates in parity with the international money market, tax rationalisation measures, and incentives for investments in innovation and infrastructure are few of the many demands from the textile industry for the upcoming budget. It should also address concerns related to skilled workforce, labour law reforms, attracting investments in the textile sector and providing a future road map for the textiles and clothing industry. Incentives should also be considered for training workforce.

Corporate income tax needs to be lowered to 28 percent in the upcoming budget and lowering it further to 25 percent in coming years as promised by FM.

The Rs 6,000 crore package announced in 2016 for textiles and apparel sector was a step in the right direction but the industry needs lot of reforms for the revival of the growth.  

A major challenge for textile industry is that it is highly capital and labour intensive sector and payback period is quite long which is many a times a big constraint for new investment in the sector. Further the government has set a target to create another 30 million more jobs in the industry over the next three years which is possible only if special incentive schemes for new investment in textile sector are announced.

Thanks to TUFS, India has made strong strides in the fabric manufacturing sector but garmenting has still not been taken up, primarily due to labour laws and it needs special attention for the success of Make in India, an initiative launched by Government of India under leadership of the Prime Minister Narendra Modi. The government should consider extending TUFS for another five years or so to enable companies to avail maximum benefit.

Exports are another challenge and industry is well below its targets. We want finance minister to introduce measures which can boost our exports as India has the potential to become one of the biggest exporters in the world.

Cotton-based textile goods accounted for almost 90 percent of India's total textile exports of about $40 billion in 2015-16 and if supported well can take the industry to new heights.

Deepak Chiripal, CEO, Nandan Denim
The neighboring countries are having duty advantage for exports to the US and EU market on selective basis. Insertion of Trans Pacific Partnership (TPP) with US has further increased the challenges for Indian textiles in the long term. Coupled with the recent announcement of the newly elected president of the US, there are fairly good chances for protection of select countries for exports to the US which happens to be the second largest importer of Indian textiles. 

And, therefore, the GoI should accelerate arrangement with EU market economies to provide concessional imports into these territories to maintain competitiveness of the Indian exports. The political disadvantage to India needs be compensated in terms of money through additional benefits for the industry to survive and grow as the largest employment generator for the national economy.

Industry also needs to upgrade its technology to meet world standards. The industry, especially the micro, small and medium enterprise sector, does not have access to capital to upgrade technology on its own. A fund should be set up for technology up-gradation & innovation and support may be extended to the companies at lower rate of interest. This will help industry in improving quality of output and become more competitive.
________________________________________________________________________________________________
Deepak Chiripal, CEO, Nandan Denim Ltd
Connect with us on WhatsApp

More From This Section

Strengthen private sector participation in defence equipment production

Budget: A healthy kick start for logistics sector in 2017

Fiscal support crucial to enhance the potential of renewables in India

Govt subsidy on new technology to give a boost to plastic packaging sector

First Published: Jan 27 2017 | 3:30 PM IST

Explore News

Next Story