Union Budget: Textiles left high and dry

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Published: March 1, 2015 12:38:33 AM

The industry had requested for a significant reduction in the duty burden on man-made fibres. However, the duty burden on man-made fibres has only been hiked further in the current budget

The Budget 2015 is a disappointing one for the textiles sector, especially because the industry had high expectations from the development-oriented new government. Being the most labour-intensive industry in the country employing over 35 million rural workers directly and contributing to over 17% to the country’s industrial production, the sector was expecting some encouragement for improving production efficiency. In view of the social and economic importance of this sector, the government has included the textiles industry as an important component in the Make-in-India programme. However, with little help from the Budget, the industry will find it well nigh impossible to play its legitimate role in the country’s economic development. There is no specific mention of the textiles sector in the Budget.

Allocation for the flagship scheme of Technology Upgradation Fund (TUFS) has been reduced from R1,864 crore in the revised Budget for 2014-15 to R1,520 crore for 2015-16. TUFS had been running into problems during the last few years because of both procedures and financial crunch. Reimbursement of benefits under the scheme for the quarters ending September 2014, December 2014 and March 2015 are already pending for want of funds. And an estimated R3,000 crore would be required for clearing a large number of cases that have been pending for nearly three years, mostly because of errors and mistakes committed by the banks in reporting TUFS sanctions to government. The industry had requested for a provision of R3,500 crore for reimbursements under the scheme during 2015-16 and R6,000 crore of additional allocation for operation of the scheme for the remaining two years of the 12th Plan period.

The textiles industry has been making serious efforts to diversify into manmade fibre-based products in order to rectify the mismatch between global demand trends and domestic production in terms of fibre mix. The industry had requested for a significant reduction in the duty burden on man-made fibres in order to help this process. However, the duty burden   on man-made fibres has only been hiked further in the current Budget, though marginally.

Apart from labour intensity, export orientation is another important feature of our textiles industry. However, the Budget has not addressed any export related issues either, for this sector.

A positive aspect of the Budget, as far as the textiles sector is concerned, is that the optional excise duty structure has been continued.

Considering the fragmented and highly scattered nature of this sector in the country, the industry had made a specific request that this facility should be continued until the introduction of GST. Continuation of this facility under the current Budget will help the industry to prepare for completing the procedural and logistical requirements for adapting itself to the GST framework expected to be introduced from the next fiscal.

DK Nair, Secretary-general, Confederation Of Indian Textile Industry

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