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February 27, 1999
'The textile industry is greatly disappointed by the Budget'
The textile industry is greatly disappointed by the Budget. The reason is the excise exemptions given to the small scale sector are the breeding grounds for excise evasion. And instead of withdrawing these concessions, more concessions have been given to the SSI sector for clearance of cotton yarn of higher value.
The textile industry has been the highest export earner and now the government has imposed import duty of 5 five per cent on import the of cotton, the essential raw material, and other components. It has also introduced a 5 per cent customs duty on machinery for 100 per cent Export Oriented Units and imports under EPCG. It is not clear whether the government will give any duty drawbacks in case of exports.
Independent processors have been paying excise duty on stenter chamber basis which works out to about 40 paise per sm while the organised composite mills have to pay at the rate of 4 to 5 rupees per sm. Nothing has been done to remedy the situation.
Specific rates of import duty on fabrics was suggested to onslaught the cheaper import for fabric. But nothing has been done. This is eating the Indian cotton mill industry.
There is shortage of power in this country and the mills have to use high speed diesel for captive generation of power. The industry wanted the HSD duty to be MODVATed. On the contrary, the excise duty on HSD has been increased, and no provision has been made to make the duty MODVATed.
Hundred per cent EOUs and plants established under EPCG were allowed duty free import of capital goods. Now a five per cent import duty has been imposed. This will make exports prohibitive. The textile upgradation fund has now included upgradation of spinning mills. This is a welcome feature.
On the whole, the textile industry is disappointed by the Budget proposals. It has been losing heavily and there is no hope of a revival despite the fact it is the highest foreign exchange earner for the country.
Dr Rajaram Jaipuria, vice-chairman, Indian Cotton Mills Federation and FICCI committee member.
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