Amritsar textile units expect import duty cuts

The woollen textile units of Amritsar, manufacturing shawls, blankets, etc., have high hopes from the Union Budget this year. They expect the Budget will promote the sector, which is one of the fastest-growing ones.

One of the expectations from the Budget is that the government will cut import duty on raw materials. High import duty is a major obstacle in meeting competition in overseas markets.

Speaking to Business Standard, Apollo Shawls Proprietor Piaralal Seth said, "The shawl industry requires a lot of value addition and is managed mostly by small and medium enterprises. The material has to go several times to units outside for dyeing, finishing, etc. and so in order to facilitate the sector paper work should be simplified. Being a handicrafts industry, we do not have to pay the central sales tax (CST) and VAT, and the status quo should be maintained in the Budget. Also, there should be a uniform VAT throughout the country, and the CST should be abolished."

He asked for special emphasis on SMEs, because 90 per cent of the units were in this category.

But the Budget may come as rude shock to the domestic textile market because the government has given indication that it may downsize or even discontinue the technology upgrade fund scheme (TUFS) from the next fiscal.

The textile industry is getting hints of a squeeze because interest subsidy reimbursement under the TUFS is being delayed in the current fiscal due to paucity of funds. Investment under the TUFS picked up significantly this year due to emerging global opportunities. The Rs 450 crore earmarked in 2005-06 for the TUFS got exhausted in December.

Kochar Sung Up Acrylics (a blanket manufacturer) CEO Mohinder Singh said, "The central government's indications are not favourable for textile units." He said the scheme should be extended for three more years in order to enable textile units to compete globally.

The duty on raw materials like polyester and nylon yarn should not be more than 5 per cent if the government wanted the blanket industry to make their presence felt in the global market, he said. "Being 20 per cent, we hope the government cuts the duty," he said.

Essma Woollen Mills Managing Director Siresh Mehra said, "The import duty, which is 20 per cent on raw materials like rags and greasy wool, is a major hindrance. We expect the finance minister to bring it down to 5 per cent. "

Secondly, we used to import blankets from China, but the import duty, which is 30 per cent, makes us it impossible to face competition in the domestic market. We expect the government to cut the duty from 30 per cent to 10 per cent," Mehra said.