The duty reduction on equipment for modernising mills and lower incidence on branded garments has left the sector happy. The finance minister announced duty concessions for mills opting to modernise and a financial package of Rs 3,884 crore for waiver of loans for handloom weavers and their cooperative societies.
Textile mills planning modernisation will benefit from customs duty exemption (five per cent earlier) on automatic shuttleless looms. Weavers will benefit from this in a big way, as the production in India of advanced shuttle-less looms is very low and, thus, they are forced to import. The import duty on second hand automatic looms will also come down to 9.33 per cent from the present 14.33 per cent.
“Duty-free imports will definitely make import of advanced shuttle-less looms cheaper,” said Rahul Mehta, president, The Clothing Manufacturers Association of India.
Branded garment makers also have a reason to celebrate. While the excise duty on branded garments has been increased from 10 per cent to 12 per cent, the abatement of 55 per cent from the maximum retail price (MRP) has also been raised to 70 per cent. This would bring down the incidence of duty as a percentage of MRP from 4.5 per cent to 3.6 per cent.
"Reduction in basic customs duty on new automatic shuttle-less looms and increase in the abatement rate for branded garments will have positive impact on the textile industry. However, the industry will have higher input tax burden on account of increase in excise duty and service tax by two per cent," said Sanjay Lalbhai, chairman and managing director, Arvind.
Adding: “The sector, which is currently under an optional excise duty regime, will suffer the incidence of the incremental increase of excise duty and service tax on goods for domestic sale. However, the same would be neutral for exports.”
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The government also plans to set up a powerloom mega cluster in Ichalkaranji, Maharashtra, with a budget allocation of Rs 70 crore. Ichalkaranji is the only place in India which produces yarn of all counts.
The textile industry in general was upbeat on the measures. Debashis Poddar, CEO of the textile division of Bombay Dyeing, said that there’d be a five per cent saving on modernisation expenditure and it would also encourage expansion.
The powerloom segment, too, has no complaints. Bharat Chhajer, chairman of the Powerloom Development & Export Promotion Council, said for the first time, special attention had been given to the sector and “our demands have more or less been met”.