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India:Pre Budget memorandum of India''s
textile and garment sectors |
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2005-2-26
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All eyes are on the Finance Minister Mr P A Chidambaram, who will announce the Indian Union Budget 2005-2006 for the Financial Year 2005-2006 in the Lok Sabha on February 28, 2005.
Will it bring cheer or spell doom for the textile and garment industry in particular, is anybody’s guess! But, from the textile and apparel sector view point, there are definite Ayes and Nays, which Mr Chidambaram should pay attention to and ultimately, frame his budget.
AYES FOR
• Further correction in existing annomalies expected
• Rationalisation in duty structure
• Dereservation of 26 items under the small scale industries sector, including the knitware segment
• Creation of a special fund, clubbing the apparel park scheme and textile centre infrastructure development scheme to provide assistance of up to Rs 50 crore
• Enhancement of the up-front subsidy for SSI sector under TUF Schemes from 12% to 15% per cent
• Credit linked capital subsidy under TUFS to be up to investment of Rs 60 lakh may be enhanced to Rs 1 crore
• Manmade sector problems to be addressed (16% to be brought down to 8%, Polyester Filament Yarn at 25%, and 16% on others, currently)
• New incentive schemes for handloom, powerloom and processing sectors
• Consessions on imported textile machinery including simplified import procedures
• Chemicals & dyeing industry on tax reliefs
• Technical textiles consessional 5 percent customs duty relief, creation of technical textiles base and other innovative valued add in the textile chain
• High Performance fibres and yarns import at 5% or Rs 15 per Kg
• Special fund for apparel & garment parks
• Modernising and technical upgradation of the processing sector
NAYES FOR
• Fresh taxes, levies and cess increases
• Cut in any existing incentives or schemes that have overall benifitted the industry
• Rise in service Tax, Mr Chidambaram, please!
• Hike in corporate tax
• Complicated import procedures
GROWTH AREAS
• Conventional textiles and apparels during 2004-8, are expected to grow at the rate of CAGR of 8% to about US $51 billion while technical textiles is likely to achieve a CAGR of 11% at $9.15billion
• Exports to US & EU will go up
• Consolidation, M&A to take place
• FDI and domestic investments to go up in the sector
• More US retailers eyeing for Indian Outsourcing market
• Machinery sales to go up as new units come up and modernisation undertaken
• SSI units may change track, either grow or downgrade
• Ancilliary units to get a shot in the arm due to incentives and business coming back to them
• Technical and innovative textile areas will come in limelight |
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