The Hindu Business Line : Mixed reaction from textile industry

Mumbai, Feb. 29 The Budget fetched mixed reactions from the textile companies. While some of the measures were welcomed, the exporters said they were left very disappointed.

“We are sorely disappointed with the budget and will take it up with the Finance Minister,” said Mr Rakesh Vaid, Chairman, Apparel Export Promotion Council. “The garment sector was declining, and the budget will only hasten its fall.”

The apparel park approval does not mean anything, since they are non-starters as there is not much employment opportunity, he said. “After agriculture, we are the second largest employers, but our apparel exports are just $8 billion compared to China, Hong Kong and Macau’s $90 billion (rough estimate). Sentiment is down in the industry and layoffs will be there, as we were already struggling to retain customer base.”

The loss due to rupee appreciation has also not been addressed, he said: “It does not matter if the dollar parity is maintained, we still earn in rupee terms. Last year there was a drop of 30 per cent in import of machinery despite TUFs, so its inefficiency has been proved. Even though the FM welcomes FDI, the sector has to be first made vibrant enough to attract investment.”

“From the textile industry perspective, the continuation of the TUF package during the 11th plan period and increase in its allocation by 20 per cent is a positive step,” said Mr Gautam Hari Singhania, Chairman and Managing Director, Raymond Ltd, in a statement. So too the approval of 30 integrated textile parks, and reduction in Central Sales Tax to 2 per cent from 3 per cent, and in CENVAT to 14 per cent from 16 per cent and custom duty reduction on project import to 5 per cent from 7.5 per cent: “However it fell short on measures with regard to the exports sector,” he said.

“It is a disappointing budget for the garment industry,” said Mr Rahul Mehta, President, Clothing Manufacturers Association of India, in a statement. “While we welcome the continuation of the Technological Upgradation Fund Scheme in the next 5 year plan, industry was disappointed that there was no reduction of import duty or removal of Countervailing Duty on import of garment machinery. The garment industry was also looking forward to reduction of bank interest on pre and post shipment credit, which would have helped the exporters who have been adversely affected by rupee appreciation of last year.”

“It is a neutral budget, good but not good enough,” said Mr Sunil Khandelwal, Chief Executive Officer, Alok Industries Ltd. “The removal of 1 per cent National Calamity Contingent Duty on polyester filament yarn is good news for us since we are major producers.. If the producers of polyester filament yarn pass on entire benefit of the waiver, it will help us save nearly Rs 30 lakh per month, supposing we buy Rs 35 crore of the yarn monthly. This along with reduction in CENVAT will reduce input cost and lead to savings.

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