The Central Budget 2015 has ignored the highly labour-intensive textile industry which has significant potential for growth.
In a press release, Mr. Prem Malik, CITI Chairman, has observed that the only positive aspect of the Budget for this sector is that the optional excise duty regime has been continued. Since the Government has included this industry under the “Make in India” programme, it was hoping for some help from the Budget for achieving its high potential for increasing industrial production, generating additional employment and improving export earnings.
With the reduction in allocation for TUFS from Rs. 1,864 crores in 2014-15 to Rs. 1,520 crores for 2015-16, the scheme operation in the ensuing financial year will face serious problems. Payments under TUFS for three quarters are already outstanding, and reimbursement for 2015-16 will also have to be made from the provision made in Budget 2015. In fact, the provision will have to be doubled in order to ensure that the scheme does not run into more backlogs in 2015-16.
The industry needs to invest more than Rs. 20,000 crores in the coming year under TUFS. There is no balance available for fresh investments under the scheme as of now. With this meagre allocation, therefore, fresh investments will be impossible under the scheme during 2015-16.
CITI had highlighted the need for the textile sector to diversify into man-made fibre-based textile products in order to address the mismatch between the global demand and India’s production patterns in terms of fibre mix. No reduction in the duty burden has been provided for man-made fibres, and therefore the industry’s plans for diversification will be seriously hampered. In fact, the effective rate of excise duty on man-made fibres has gone up from 12.36 per cent to 12.5 per cent in the Budget.
The increase in service tax to 14 per cent will also have an adverse impact on the textile industry, the press release adds.