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: The Budget has disappointed the textile sector. The sector, while reacting to the Budget has said that the sector will not see inclusive growth because the government has not announced any stimulus package nor has increased the duty drawback rates from the prevalent 8%. The only saving grace is the abolition of fringe benefit tax for corporates and extension of 2% interest subvention beyond September till March 2010.
Said Sunil Khandelwal, CFO at Alok Industries, “The corporate tax structure is not changed. We pay 30% taxes on our income which has not been enhanced further.” P. Kalai, associate analyst with research firm ICRA said, “Overall, the budget is disappointing for the sector. The excise duty on man-made fibre and yarn has been increased to 8% from 4%. This will increase the cost of production. There has been a marginal increase in funds allocated in the technology upgrade fund scheme with extra allocation of Rs 1,400 crore recently.”
Another textile player from Tiruppur in south India added, “We had proposed tax exemption for the sector. We also wanted reduction in interest rates on pre and post-shipment credit and facilitation of faster clearance of arrears of terminal excise duties and central sales tax. In fact, the textile ministry had, before the announcement of the budget said the government is working towards creating 10 million more jobs in the sector, which already employs 33 million workers, by the end of the 11th five-year plan.”
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