Textiles Sector

 

·         Allocation of Rs 3100 crore for TUFS scheme

·         Reduction of basic customs duty on raw silk (not thrown) from 30 to 5 per cent

·         Reduction of basic customs duty from 5 per cent to 2.5 per cent on certain textile intermediates

·         Reduction of basic customs duty on certain specified inputs for manufacture of certain technical fibre and yarn from 7.5 per cent to 5 per cent

·         Readymade garments and made-ups of textiles to attract mandatory levy of 10 per cent, from the optional levy they had previously

·         Rs 3,000 crore to NABARD to provide support to handloom weaver co-operative societies which have become financially unviable due to non-repayment of debt by handloom weavers facing economic stress.

 

The government’s most pampered child continues to get support budget after budget and this year was no different. All in all the budget was indeed a good one for the textile sector with the TUFS allocation coming in, basic custom duty being reduced on raw silk, for certain textile intermediates, for yarns, for certain specified inputs for manufacture of technical fibre and last but not the least Rs 3000 crore support lent to the handloom weaver co-operative societies through NABARD. This initiative would benefit 15,000 cooperative societies and about 3 lakh handloom weavers. All this clearly shows that the government wants the sector to continue on its revival trend and to post a strong growth year after year. In fact the reduction in custom duties as mentioned above is indeed a positive for the raw material importing textile companies.

 

However, companies in the textile sector are more concerned about the mandatory levy of 10 per cent on readymade garments, from the optional levy they had previously. Though lot of fuss is being made out of this announcement, we don’t believe this is a negative as the manufacturer does get credit of the tax paid on inputs, capital goods and input services. Hence, we believe the budget is positive for the textile sector and the sector has indeed got its share of support for the budget.