Govt gives Rs 200-cr grant to Tirupur textiles cluster.
The Budget for 2010-11 has evoked mixed responses from the textile industry. Even as most welcomed the extension of 2 per cent interest subvention scheme till 2010-11, many were apprehensive about the impact of increase in excise duty and rising fuel prices on input costs.
“The increase in excise duty coupled with an increase in the prices of petrol and diesel by about Rs 2 will substantially increase raw material cost and will impact other input costs. The industry, already struggling mainly on account of high costs, will be further suffocated with these cost increases,” said Premal Udani, chairman, Apparel Export Promotion Council (AEPC), and managing director of Kaytee Corporation Private Ltd.
However, others were enthused on the retention of optional excise duty for the entire textile value chain, which had been introduced in 2004. The industry was apprehensive that the optional excise duty route might be withdrawn in the Budget.
“The continuation of the exemption route will provide the industry with an opportunity to consolidate the gains of recovery, which the industry has started seeing in the last couple of months… However, we are waiting for more details under the Textile Upgradation Fund Scheme (TUFS),” said Shishir Jaipuria, chairman, Confederation of Indian Textiles Industry.
“Given the circumstances, they have done a good job. For the textile industry, they have left most of the duties untouched and also extended the interest subvention by a year,” said Sunil Khandelwal, chief financial officer, Alok Industries.
Industry has welcomed the allocation of Rs 200 crore for establishing a zero-discharge facility for Tirupur and the priority to skill development for textile and clothing industry. Moreover, even as industry applauded the allocation of Rs 2,400 crore under TUFS, most stated that the amount would suffice for a period up to June 2010 and thus were insufficient to meet the needs of the industry.
“From June 2009, there was no reimbursement of the TUFS subsidy as everyone is waiting for the fund allocation,” said R K Dalmia, senior president, Century Textiles and Industries.
Moreover, some even pointed out that restricting the interest subvention on export credit to the handloom and the small and medium enterprises sector sector would leave out a large number of textile exporters from the benefits of this step.
Industry was also skeptical about the increase in excise duty from 8 per cent to 10 per cent on man made fibres as it will affect the cost margins of companies already reeling with rising prices of raw materials.
Moreover, most were satisfied by the thurst given by the Budget to revive consumption while proceeding on the path to fiscal consolidation.
