Textile Ministry For 8% Excise On Fibre, Ready-made Garment

New Delhi, January 27: | Updated: Jan 28 2003, 05:30am hrs
In its 2003-04 Budget proposals, the textiles ministry has sought a uniform excise rate at 8 per cent for all items from the fibre to the ready-made garment and made-ups stage. It has thus accepted the recommendations of NK Singh steering group and the two apex organisations Confederation of Indian Industry (CII) and the Indian Cotton Mills Federation (ICMF). On the customs side, barring capital goods, the ministry wants the government to take a decision on suitable adjustments in the duty structure in the context of the Doha market access negotiations currently under way in Geneva. It has proposed an across-the-board 5 per cent duty on import of the remaining machinery items required by the sector and which are not fabricated indigenously for technology update. The proposals have the textiles minister Kashiram Ranas backing.

Mr Rana, however, appears to be not in favour of scrapping the 140-odd excise exemptions currently applicable to the textile sector and wants to retain some of them.

The suggestion for a uniform excise also assumes significance in the context of fierce competition arising due to the completely phasing out the textile export quotas under the World Trade Organisation agreement on Textiles and Clothing by December 31, 04.

The move according to ICMF will also help compete the excise rationalisation exercise initiated in the 2002-03 Budget.

While the Kelkar task force in its revised report recommended a 16 per cent excise duty on all textile products, it, however, had fallen in line with the NK Singh steering group suggestion for doing away with all the exemptions.

Currently, the excise duty on spun yarn as well as wool is 16 per cent each, filament yarn 32 per cent, cotton 8 per cent, while cotton knitted fabrics are exempted from Cenvat. The exempted list also includes handloom apex co-operative societies, handloom-owned processed houses and the silk sector, resulting in considerable leakage of revenue.

Again, grey knitted fabrics, knitted garments and processed knitted fabrics have been given the option to pay or not to pay the excise duty. The result is that no duty from these items is forthcoming, officials point out.