Textiles sector seeks more relief

Written by Commodities Bureau | Mumbai/Chennai | Updated: Dec 11 2008, 06:22am hrs
Considering the enormous challenges faced by exporters of textile goods, the textile industry sector is expecting some more measures in the near future.

The stimulus package incorporated most of the demands made by the industry organisations such as Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) and the Cotton Textiles Export Promotion Council (Texprocil).

However, representatives of both the organisations have pointed out that the current package is not sufficient enough to revive especially the textile export sector.

The package is not sufficient enough to combat the absolute adverse global economic situation, Sanjeev Saran, Chairman of SRTEPC said while appreciating the fiscal stimulus package announced by the government. The existing interest subvention of 2% is not sufficient and should be increased to at least 4% to give some relief to the exporters, he added.

An across-the-board cut of 4% in the ad valorem cenvat rate would give a fillip to the manufacturing sector and enable reduction in the prices, VS Velayutham, chairman of Texprocil said. He also pointed out that the textile industry was looking towards a moratorium on the loans for a period of 2 years which had been obliquely addressed in the growth stimulus package announced by the Reserve Bank of India (RBI) on December 6, 2008.

He requested the RBI to clarify the matter explicitly so that the textile industry could face the challenges of the economic slowdown.

While the steps taken by the government would lead to easing of liquidity/credit needs of the exporters, Velayutham appealed to the government to consider increase of incidence of duty drawback and DEPB as the industry is eagerly awaiting the announcement in this regard.

He has also welcomed the extension of interest rate subvention of 2% on pre and post shipment credit, the additional fund of Rs 1,100 crore for refund of terminal excise duty and additional allocation of Rs 1,400 crore to clear the entire backlog in the TUF Scheme, which would enhance cash flow of the exporters. In this connection, he recalled his recent meeting with the former finance minister who had in principle agreed to consider additional allocation for the TUFS fund and the Interest rate subvention.

To sustain the competitiveness of the textile sector especially of synthetic textiles, the drawback rates which were reduced in September should be immediately restored to its earlier rates, Saran said. He also requested the government to restore the earlier DEPB rates which were reduced recently.

Saran pointed out that China has recently increased its export incentives to support the textile sector from 9% to13% which has subsequently been increased to14% from November 1, 2008 in view of the slowdown in major markets.

China being one of the main competitors of India in the textile field we have to take this also into account while deciding on the support measures to maintain competitiveness of exporters, he added.

Meanwhile, the textile industry, especially those in the power-starved Tamil Nadu, is requesting the Centre to exempt diesel for captive power generation from all taxes. K V Srinivasan, chairman of the Southern India Mills Association (SIMA) has requested the Union government to announce a two-year moratorium package for the textile industry to avoid NPAs and restore the duty drawback rates which were drastically reduced recently.

The Tirupur Exporters Association (TEA) president A. Sakthivel, said that some of the important requisition of the exporters have not been included in the stimulus package. He requested the Union government to consider 5 year-holiday in payment of income tax for the exporters. He also requested that exporters should be exempted from the payment of all service tax and fringe benefit tax instead of giving refund in service tax for a few services.

A two-year moratorium package for the industry to avoid NPAs and restoration of the duty drawback rates which were reduced recently

The industry was looking towards a moratorium on the loans for a period of 2 years which had been obliquely addressed in the growth stimulus package

The increase of incidence of duty drawback and DEPB

An across-the-board cut of 4% in the ad valorem cenvat rate to give fillip to the manufacturing sector

A five-year holiday in payment of income tax for the exporters

Restoration of the drawback rates reduced in September to its earlier rates

Service tax and fringe benefit tax exemptions for the exporters instead of service tax refund for a few services

Increase in the existing interest subvention of 2% to 4% to give some relief to the exporters