The Union Budget 2021, to be announced on 1 February 2021, is expected to be one of the most consequential Budgets post the COVID-19 pandemic for the country.
Considering the pandemic’s effect on the economy, it will be important to understand the impact of the Budget on the retail sector.
The Textile Ministry has taken up the industry demand for implementing a uniform GST (Goods & Services Tax) structure for apparels and textiles to address the problem of higher duties on inputs and abolishing anti-dumping duties on viscose staple fibre (VSF) with the Finance Ministry for redressal in the forthcoming Budget.
In the last Budget, the Finance Ministry had removed anti-dumping duties on purified terephthalic acid (PTA), which is an important input in the manufacture of textile fibres and yarns.
The move hit domestic manufacturers of PTA such as Reliance Industries, JBF and Indian Oil but benefited thousands of fibre, yarn and garments producers who could source the input much cheaper.
In November 2020, the government withdrew ant-dumping duty on acrylic fibre to enable sweater and shawl manufacturers get the raw material at competitive prices.
Textile associations such as the Southern Indian Mills Association, Indian Texpreneurs Federation, and Northern India Textile Mills’ Association have given representations to the Centre seeking removal of anti-dumping duties on VSF to prevent stoppage of production across the value chain and save jobs from getting lost.
On the demand for implementation of a uniform GST structure for textiles, the official said the present rates were creating an inverted duty structure, where taxes on inputs are higher than that on output, and blocking working capital.
At present, man- made fibre is taxed at 18 per cent, spun yarn and filament yarn at 12 per cent and final output, including garments, at 5 per cent.
Furthermore, in the past few months, the Government of India has been introducing a series of amendments to the ATUFS also.
TEAM PERFECT SOURCING spoke to some industry experts on their expectations from the budget
Our general expectations related to our garments industry are that theCovid support emergency credit loan has not been given to SMA 1&2 categorized units which needs to extended because they too are very badly affected and extending support to them would ensure the complete revival of the industry.
Being labour intensive industry we requested for a collective effort to build alabour supportive infrastructure like housing and related amenities.
For which we have requested if Industry by Suamoto comes and invest to promote this cause for their workers that investment need to be treated as an expenditure with double weightage.
We also expect that a R&D center be developed in Tirupuras it will be a big support to small and medium sized companies in terms of designs.
Raja M Shamugham, President, TEA.
The Textile Industry needs a package of relief in the upcoming budget.
A revision of the Technology Mission on Cotton with a focus on transfer of technology, clean cotton branding for Indian cotton and cotton textile products is much needed to revive the industry.
Expeditious conclusion of FTA agreements with the UK, EU and US and the removal of “anti-dumping duty on import of VSF will help the textile achieve global competitiveness as the demand for viscose staple fiber and its blended textiles and clothing market opportunities has increased steeply not only in India, but also across the globe.
The government should look at attractive rates of newly implemented scheme RoDTEP to take care of state and central embedded taxes.
RS Jalan, MD, GHCL Limited
We expect the government to help the traders especially in textile and garment businesses, who have been facing many challenges ranging from lack of demand to capital woes.
The Union Budget should announce three years’ income tax rebate for traders who are affected by Covid-19 pandemic.
The Government should provide special financial package to small and medium traders and give bank loans at 6 per cent for big and corporate traders.
The way the loans are being offered to MSMEs under SIDBI now. Textile industry has been demanding abolition of duty levied on Purified Terephthalic Acid (PTA) to remain globally competitive.
Ammanabolu Prakash, President, Telangana State Federation of Chambers of Commerce and Trade (TSFCCT)
We appeal the Govt to raise customs duty on man – made yarns to 10%, which is currently at 5%.
Unreasonably low priced import is one of the primary issues confronted by domestic MMF industry.
Man-made yarn sector which is one of the largest employment generating segment within the textile industry and it’s highly capital and labour intensive industry as well.
The unreasonably low-priced imports of man-made yarn into India have been causing considerable amount of injury to domestic manufacturers for last five years or so.
Sanjay Garg, President NITMA