National and regional problems are dampening the growth plans of the spinning mills, especially those in the South. Appreciating rupee, high interest rates, increasing cotton price and uncertain power supply have crippled the competitiveness of the spinning mills, according to KV Srinivasan, chairman of the Southern India Mills? Association (SIMA).
He said that the efforts put in by the industry and the government, during the past couple of years, to make the industry globally competitive, to spur investments andto create new employment for over 15 million people, have gone in vain as the Budget has totally ignored the textile industry.
Srinivasan said to compete with countries like China, Pakistan, Bangladesh, Sri Lanka and Taiwan, the import duty on cotton has to be reduced from 10% to 5% and it should be exempted from special counterveiling duty (CVD).
He said the industry has been asking for the withdrawal of 1% drawback extended for cotton export, refund of local levies, reduction of customs duty and excise duty on man-made staple fiber from 7.5% to 5%, withdrawal of customs duty on furnace oil imports for captive consumption by textile industry and reduction in mandatory excise duty, withdrawal of customs duty on textile machinery except spindles, etc, to sharpen the competitive edge of the Indian spinning industry.
He said the demand of the industry for a one-year moratorium for repayment of loans and interest to prevent many textile units becoming non-performing assets (NPA), has also not been considered by the finance minister.
Srinivasan pointed out that the allocation of fund for textile upgradation fund (TUF) in the Budget, was sufficient to meet only the backlog and would not meet the future demand.
On the contrary, the Budget has withdrawn shuttleless looms from the exemption list of central excise or CVD and has levied 8% duty. ?This would totally discourage any investment in the weaving sector, which is a weakest link in the textile value chain and would seriously affect the development of power loom sector and various textile parks in the country,? the SIMA chairman said.
SIMA welcomed the announcement of textile clusters for development of power looms in Bhiwandi and Erode, which is the only welcoming feature in the Union Budget for the textile industry.