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Budget woes-Textile vendors at the receiving end |
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2004-7-13
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Vendors and components suppliers are up at arms against Finance Minister P Chidambaram for his decision to abolish Cenvat on powerlooms and handlooms.
Producers of man-made fibre said the move could check the industry’s growth.
According to the new budget, with zero excise on the end product, the taxes paid by the supplier on parts, components and raw materials, cannot now be set-off downstream.
Non availability of Cenvat will encourage powerloom and handloom manufacturers to replace man-made fibres (attracting 24 percent excise duty) with cotton, which attracts only 4 percent.
Besides, they (powerlooms and handlooms sectors) also have the option to opt out of it. This will be working against the interests of man-made fibre industry.
“The duty differential between cotton yarn and polyester filament yarn has become 24 per cent now,” OP Lohia, Managing Director, Indo Rama Synthetics said.
“Man-made fibre accounts for only 15-20 per cent of our textile exports, as against 60 per cent in the case of China. I don’t think it will grow now,” added Lohia. |
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