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Increase in Custom Duty…Sale of Textile Machinery to be Affected

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The increase in the Basic Customs Duty on textile machinery from 5% to 7.5% is seen as one of the biggest disappointments for the textile industry of India which has been utilizing the scheme to expand in textile and apparel sector.

Likewise, the outlay for Amended Technology Upgradation Fund Scheme (ATUFS) is increased from Rs. 650 crore in 2022-23 to Rs.900 crore in 2023-24. Customs duty on naphtha is increased from 1% to 2.5%.

Though it is in line with the government priorities of Atma Nirbhar Bharat and ‘Make in India’. In this regard, however, it should be noted that the country is not even producing 20% of the machinery requirement.

This will impact the new investments planned in this sector.

CITI has also requested for retaining 5% import duty for all types of textile machineries for the next three years or till the domestic manufacturers establish themselves to meet the domestic demand.

As per Budget documents, outlay for RoDTEP scheme has been increased from ₹13,699 crore in 2022-23 to ₹15,069 crore in 2023-24.

The allocation for RoSCTL scheme is increased from ₹7,641 crore for 2022-23 to ₹8,405 crore for 2023-24. This will have some impact on the global competitiveness and also the recently announced PLI Scheme and PM MITRA Scheme in the absence of Technology Upgradation Fund Scheme which was in vogue from 1st April 1999 to 31st March 2022.

This year budget is considered to be an important one for the textile and apparel sector which is struggling through very tough times due to slowdown in market.

If we look and analyse this year’s budget very closely it shows that there is more than a 20% increase in budgetary grants for the textile industry which could be used for the growth of the industry.

The focus on infrastructure, investment, green growth, youth power and inclusive development will boost India’s journey to be the fastest-growing robust economy.

Total grant for Textiles for the year 2023-24 is fixed at Rs. 4,389.34 crore which is about 22.6 per cent higher than the Revised Budget Grant for 2022-23.

In the present budget, Grant of Rs. 200 crore has been kept for PM MITRA Parks while for PLI Scheme, the grant is budgeted at Rs. 5 crore. But there are few decisions also which will have their negative impacts also.

Most of the players have applauded the current Government’s and have termed it as one aiming at strong and stable economic growth.

To enhance the productivity of extra-long staple (ELS) cotton, the Government has decided to adopt a cluster-based and value chain approach through Public Private Partnerships (PPPs).

This will facilitate collaboration between farmers, state and industry for input supplies, extension services and market linkages. In the long run, it will be helping garment industry provide raw material security.

Five new HS Codes for cotton have been identified for further classification of cotton as per staple length. This will help in calibrating policy support for the segments which are import dependent or need further incentivisation.

The support for the procurement of cotton by the Cotton Corporation under the Price Support Scheme is withdraw.

Although it is difficult to predict the impact at this stage, a chunk of industry feels that it looks like the Government is trying to move towards price discovery and self-sustainable farm-to-factory cotton movement.

Fund for RoDTEP scheme has been increased from Rs.13,699 crore in 2022-23 to Rs.15,069 crore in 2023-24.

The allocation for RoSCTL scheme is increased from Rs.7,641 crore for 2022-23 to Rs.8,405 crore for 2023-24.

Rs 9,000-crore corpus for a revamped credit guarantee scheme will alleviate the stress of small and medium enterprises.

It will enable additional collateral-free guaranteed credit of Rs. 2 lakh crore reducing the cost of the credit by about 1 per cent. The textile industry would be the major beneficiary out of the scheme since more than 80% of the textile units come under the MSME category.

The increased allocation for the Interest Equalisation Scheme (IES) from Rs. 2376 crore in 2022-23 to Rs. 2932 crore in 2023-24, which is up by 23%, will help support exports.

The focus on building a green infrastructure will go a long run in reducing our carbon footprints and making textile and apparel facilities sustainable.

The Government has identified 100 critical transport infrastructure projects, for last and first mile connectivity for ports, and will be undertaking investment of Rs. 75,000 crore (incl. Rs. 15,000 crore from private sources), and will promote coastal shipping for passengers and freight.

Launch of Pradhan Mantri Kaushal Vikas Yojana 4.0 will further facilitate skilling lakhs of youth with Industry 4.0 courses like coding, AI, robotics, mechatronics, IOT, 3D printing, drones and soft skills.

The establishment of Skill India International Centres would further prepare a skilled workforce for international opportunities.

States will be encouraged to set up a Unity Mall in their state capital or most prominent tourism centre or the financial capital for promotion and sale of their own ODOPs (one district, one product), GI products and other handicraft products, and for providing space for such products of all other states.

T. Rajkumar, Chairman, CITI
T. Rajkumar, Chairman, CITI

The budget as pragmatic and futuristic laying strong foundation for India @100!. The focussed approach of the Government for enhancing the productivity of Extra-long Staple (ELS) Cotton, by adopting a cluster-based and value chain approach through Public Private Partnerships (PPP) which means collaboration between farmers, state and industry for input supplies, extension services, and market linkages. The textile industry now eagerly looks forward to further details of the policy in this regard. The Government has identified five (5) new HS Codes for cotton, for further classification of cotton as per staple length. This will help in calibrating policy support for the segments which are import dependent or need further incentivisation. The new Artificial Intelligence (AI) driven data collection of agricultural products will also help in better crop estimation and lend predictability to cotton prices. In fact, the infrastructure support towards better storage is expected to also improve the quality of cotton procured from farmers. We also welcome the higher budgetary allocations for schemes promoting capacity building and investments like National Technical textiles Mission ( NTTM), PMMITRA, and Textile Development cluster scheme. I appreciate the efforts in revamping the MSME sector, and the government’s plan to infuse a corpus of Rs. 9000 crore will enable additional collateral-free guaranteed credit of Rs. 2 lakh crore reducing the cost of the credit by about 1 percent. However, the industry is concerned to note the increase in import duty of textile machinery to 7.5%, as indicated in last budget. This will impact the new investments planned in this sector. CITI had requested for retaining 5% import duty for all types of textile machineries for the next three years or till the domestic manufacturers establishes themselves to meet the domestic demand. CITI had also requested for removal of 10% import duty on cotton and cotton waste which is 5% BCD & 5% AIDC, and abolition of inverted duty structure on MMF textile products.

T. Rajkumar, Chairman, CITI

 

K M Subramanian, President of Tirupur Exporters Association (TEA).
K M Subramanian, President of Tirupur Exporters Association (TEA).

Union Budget by terming it as one aiming at strong and stable economic growth.

The increased allocation of Rs 900 crore for ATUF (amended technology upgradation fund) scheme for 2023-24 as against Rs 600 crore last year and would help to clear the ATUF pending claims.However, there was no announcement on continuance of ATUF scheme in this budget and we are hopeful that government would announce it in the near future, he said. The focus on enhancing the yield of extra-long staple (ELS) cotton would help increase the manufacturing of value-added garments and also to reduce import of ELS cotton. I also welcome the extension of the credit guarantee scheme for MSMEs with an infusion of Rs 9,000 crore, collateral for Rs 2 lakh crore loans to MSMEs, effective from April 1, 2023.

K M Subramanian, President of Tirupur Exporters Association (TEA)

 

Ravi Poddar, MD, Cheer Sagar
Ravi Poddar, MD, Cheer Sagar

A quick look at the budgetary allocation shows that there is more than a 20 per cent increase in budgetary grants for the textile industry which could be used for the growth of the industry. Overall, this budget is a positive, growth-oriented and forward-looking budget. The focus on infrastructure, investment, green growth, youth power and inclusive development will boost India’s journey to be the fastest-growing robust economy.

The announcement to cover more sectors under the PLI scheme and support to the MSME sector will help thrust exports and investment in the country. Increased 38% allocation of ATUFs from Rs.650 crore in 2022-23 to Rs.900 crore in 2023-24; this will help in the release of payment for pending cases faster.

Increase in MAI is a  good move but this may not be adequate as the global trade shows are increasingly giving opportunities for showcasing which need to be exploited. A planned scheme for aggressive overseas marketing may be notified with a sizable corpus to encourage exporters to showcase globally.

Ravi Poddar, Cheer Sagar, Jaipur

 

 

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