Union Finance Minister Pranab Mukherjee on Monday announced a package of Rs.3,000-crore as part of the budget for 2011-12 to help the handloom sector overcome its financial problems.
Noting that weaver cooperative societies had become financially unviable since, many weavers were not able to repay their dues because of economic stress, he said the package would be provided to the societies through NABARD [National Bank for Agriculture and Rural Development]. The relief would be provided in phases.
Stating that the details of the scheme would be worked out by the Textiles Ministry in consultation with the Planning Commission, he said the initiative would benefit 15,000 cooperative societies and about 3 lakh weavers.
The budget also proposes an increase of about 6 per cent in the Plan outlay for the Textiles Ministry from Rs.4,725 crore to Rs.5,000 crore.
The Ministry's flagship Technology Upgradation Fund scheme is the major beneficiary with an increase in allocation from Rs.2,785 crore to Rs.2,980 crore, followed by the scheme for integrated textiles park, where the allocation has been hiked from Rs.182 crore to Rs.297 crore.
The budget also provides for the setting up of a mega handicraft cluster at Jodhpur in Rajasthan and a reduction in the basic custom duty on raw silk from 30 per cent to 5 per cent.
Readymade garments and made-ups of textiles, which are now under the optional excise duty regime, would, however, come under a mandatory excise duty regime with a unified rate of 10 per cent. But, this would apply to branded readymade garments and made-ups and not to those tailored or made to order for retail customers. The manufacturers would also be able to avail themselves of credit of tax paid on inputs, capital goods and input services.
The budget also provides for extension of full SSI exemption for the readymade garment and made-up industry. Besides, export of these items would continue to be zero-rated.
‘Roll back duty on branded readymade garments'
The Confederation of Indian Textile Industry and the Apparel Export Promotion Council have urged the Finance Minister to roll back the budget proposal to bring branded readymade garments and made-ups under the mandatory excise duty of 10 per cent.
In a statement, CITI Chairman Shishir Jaipuria said the proposal would not only had serious adverse impact on “these high labour intensive segments'' but also had significant operational problems at the level of implementation.
He pointed out that since most inputs for the segments came through the optional excise duty regime, there would be very little duty credit to offset.
He also noted that most of the branded readymade garment production was outside the SSI segment and consequently the proposal for SSI exemption would not be of much help.
“This [mandatory] duty coupled with SSI exemption has the potential to further fragment the readymade garment and made-ups industries'', he said.
Echoing Mr. Jaipuria's views, AEPC Chairman Premal Udani said the proposal for mandatory duty would ‘badly hit' garment exporting units in Tamil Nadu and West Bengal.
Industry hails budget
M. Soundariya Preetha reports from Coimbatore
The Southern India Mills' Association has said that reduction of customs duty on cotton waste from 10 per cent to nil duty will enable the made-up and denim sectors to meet the raw material shortage and have a level-playing field with countries such as Pakistan.
Reacting to the Union Budget announcements, association Chairman J. Thulasidharan said in a release on Monday that 10 per cent mandatory excise duty on branded ready-made garments and textile made-ups without Cenvat credit facility would increase the cost of the products. Levy of 5 per cent excise duty on automatic looms and projectile looms would discourage investments in the weaving sector.
The Cotton Textiles Export Promotion Council Chairman Amit Ruparelia has said in a release that introduction of self-assessment of duty liabilities on import and export cargo for clearance at customs will speed up the process and lead to availability of raw materials on time to meet the production schedule.
The Confederation of Indian Textile Industry has said in a release that continuing the optional scheme for excise duty for yarn and fabric was a welcome feature for the textile industry.
Allocation of Rs.3,000 crore to National Bank for Agriculture and Rural Development in phases for handloom cooperative societies will help several handloom weavers.
