New entrants to the 2.3 million units strong powerloom industry in might find a disincentive in the imposition of five per cent excise duty on automatic looms and projectile looms, say industry experts. According to Confederation of Indian Textile Industry (CITI), the move would mean additional duty burden for machinery industry, fabric manufacturers including decentralised powerlooms
"Imposition of 5 per cent excise duty on automatic looms and projectile looms would add an avoidable duty burden on the machinery industry which will impact fabric manufacturers, including the decentralised powerlooms," says Shishir Jaipuria, chairman, CITI, talking about the impact of the excise duty on the textile machinery.
Of the 2.3 million units in the industry, close to two lakh are automatic looms while rest are semi-automatic or ordinary looms. "Textile machinery for powerloom sector are available in the range of Rs 5 lakh to Rs 20 lakh. But the additional excise duty will mean costlier machinery. Many new players will find it tough to enter the sector at such high costs. We will be making our representation to the Finance Ministry to reconsider the proposal," says Bharat Chhajer, chairman, Powerloom Development and Export Promotion Council (PDEXCIL).
However, the excise duty will not only mean a disincentive for new players in the powerloom industry but also weaken fabric production in the country. "India is still weak in fabric production because about 22 per cent of the yarn is exported. Instead of strengthening the fabric value chain in textiles by encouraging the powerloom industry, such additional burden discourage and weaken the sector," says DK Nair, secretary general at CITI.
In Gujarat alone, cotton and synthetic powerlooms combined, there are currently over six lakh units. Of these around 50,000 cotton powerlooms are in Ahmedabad and other North Gujarat regions. Also, on its part, PDEXCIL expects to see an addition of another 50,000 powerlooms in Gujarat.The textile industry body CITI has the reduction of customs duty from 7.5 per cent to 5 per cent on certain textile intermediates and inputs for technical textiles will be of some help to the nascent and potential technical textiles.