Union Finance Minister Nirmala Sitharaman has proposed to ease local sourcing norms for foreign direct investment (FDI) in single brand retail and hence, consumers will get a wider choice in international apparel brands.
But the move could end up hurting the local manufacturers!
“The mandatory requirement of local sourcing of items for foreign brands investing in India will further be reduced. While this is a boost to FDI, it is contradictory to the ‘Make In India’ push. The Indian consumer will certainly benefit with more international labels. However, it will hurt local manufacturers,” said Rahul Mehta, President and Chairman, Clothing Manufacturers’ Association of India (CMAI).
Despite the Union Budget having a total provision of Rs. 4,831.48 crore for the textile sector, there were no major industry-specific incentives announced. Increased budget allocation for the handloom, handicraft, wool, silk, jute and powerloom sector will give a boost to traditional textile artisans and craftsmen. “The allocation has also been increased for skilling in textiles, which will benefit the industry in a longer run,” said Sanjay Jain, Chairman, Confederation of Indian Textile Industry (CITI).
“The budget allocation has gone down from Rs. 6,943.26 crore in financial year 2018-19. We expected more allocation for technology upgradation fund (TUF) against the Rs. 700 crore that has been announced because the obligations for the same run into a few thousand crores,” added Jain.
Certain indirect benefits that have been announced in the Union Budget could help boost consumption. Textile and apparel industry, which gives livelihood to some 10 crore people in India, also expected more measures to safeguard domestic interests. “The 2 per cent interest subvention for MSMEs for incremental and new loans along with the proposal to widen the turnover limit of Rs. 250 crore to Rs. 400 crore for lower rate of corporate tax at 25 per cent may increase consumption,” said Mehta.