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Textiles
Highlights
- 16%
excise duty imposed on branded readymade garments and clothing
accessories.
- Custom
duties on manmade fibre intermediates PTA, MEG, DMT, caprolactum
reduced from 25% to20% and on polyester and nylon chips
from 35% to 25%.
- Customs
duty on textile machinery reduced from 15% to 5%.
- Cotton
yarn excluded from the SSI exemption scheme
| Budget
Impact |
| Excise |
 |
Customs |
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Policy
Tax |
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On the customs
duty front, notable features include reduction in custom duties
on manmade fibre intermediates. This will entail reduction of
input costs for the synthetic fibre manufacturers but pose a
formidable challenge to the fibre intermediate manufacturers.
The reduction
in customs duty on textile machinery will give a fillip to
the modernisation of the weaving industry, which is currently
in very bad shape.
On the
excise duty front, 16% excise duty is imposed on the branded
readymade garments (with a 40% abatement on MRP) i.e a 9.6%
cost increase.
The independent
textile processors will now be subjected to advalorem duty
of 16%. This will help reducing the excise duty evasion by
the unorganised players.
The government
has revised approval for effecting lay off, retrenchment and
closure required by industrial establishments employing not
less than 100 workers to 1000 workers. This will help textile
industry in general and composite mills in particular as these
mills were not able to compete with the unorganised players
due to existing labour laws.
Outlook
Consistent with the governments on going process of liberalisation
of economy, the import duty structure of the textile industry
has also undergone a significant change in this budget.
The process
of dismantling MFA quotas is also expected to pose a formidable
challenge to textile industry but it may be a blessing in
disguise for the Indian yarn and garment exporters which are
cost wise quite competitive.
| Voices |
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In
case of readymade garments the 16 % excise duty is not
welcome. The garments account for 20 per cent of our sales.
In a way it will effect our margins but ultimately the
end customer has to pay the price
- Adesh Gupta,CFO,Indian Rayon |
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The
finance minister has at least acknowledged our main demands.
Textile industry has to be modernised so as to be globally
competitive. With the reduction in custom duties on textile
machinery the modernisation in textile industry will get
required fillip.
- B K Patodia,President,ICMF |
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