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The Indian Textile Industry is one of the key and integrated industries in the Indian economy. It is the largest employer after agriculture. It employs approximately 35 million people directly and 50 million people indirectly. The Union Budget for 2013-14 has not made any significant changes for the Man Made Fibre Textile Industry.
Budget Provision:
The readymade garment industry is in the throes of a crisis. The industry needs a lifeline. There is a demand to restore the ‘zero excise duty route' for cotton and manmade sector (spun yarn) at the yarn, fabric and garment stages.
In the case of cotton, there will be zero duty at the fibre stage also and, in the case of spun yarn, there will be a duty of 12 percent at the fibre stage. The ‘zero excise duty route' will be in addition to the CENVAT route now available.
Industry Expectations not fullfilled:
- The duty on man-made fibres and their raw materials may be reduced to 8% from the current 12% - Ignored completely
- Abolition of customs duty and special additional duty on man-made fibres as it would help the industry to source fibres from global markets during the time of shortage or a sharp increase in domestic prices – not fulfilled.
- To increase the exemption limit for service tax to Rs 15 lakh from the current Rs 10 lakh. Besides, it has demanded reduction in rate of service tax to 10 per cent from 12 per cent to lessen the burden on the industry. – not fulfilled.
- Suggested to convert the mandatory duty of 12% on branded garments and made ups to 8% optional duty – not fulfilled.
- Customs duty on Titanium Dioxide (TIO2) and Spin Finish Oil may be reduced to 5 percent. Currently, 10 percent duty applies to TIO2 and 7.5 percent to SFO. These are consumables for production of manmade fibers and filaments and mainly come through imports. Reduction of duties would make fibers more affordable to the industry – not fulfilled.
Companies to Watch:
JBF Industries, Reliance Industries, Century Enka, Indorama Synthetics, Garden Silk Mills, Grasim industries, Aditya Birla Nuvo, SRF etc
Outlook:
The long standing demand to reduce the Excise Duty on Man-made Yarn / Fabrics and to bring it at Par with the Excise Duty on Cotton Yarn / Fabrics has gone unheeded. With the cost of production going up in China, man-made fibre-based textiles industry of India has an opportunity of opening up for expansion of its market share, if competitive raw materials can be ensured. The reduction in the duty for raw materials such as PTA, MEG and DMT is necessary has been completely ignored in the budget.
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