Most of the apparel and textile industry associations are pleased with the budget, terming it balanced, growth-oriented and forward looking. However, the proposal of excise duty on branded readymade garments and made-up articles of textiles with retail sale price of more than Rs 1000 is still a cause for concern for the industry.
Finance Minister Arun Jaitley has allocated Rs 3,350 crore for the textile industry, including Rs 1,400 crore for the amended TUF and Rs 300 crore for the development of Mega Clusters, and Rs 200 crore for rural development.
The industry’s long requisition was addressed in this Budget session, with the apparel sector welcoming the reduction of the basic customs duty on specified fibers and yarn, which was reduced from 5 per cent to 2.5 per cent.
Skill upgradation, which is another major requirement of the industry, has also been addressed by the government, with the proposal of allocating Rs 1,700 crore for the setting up of 1,500 multi-skill development centres.
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AEPC Chairman Ashok G Rajani welcomed the Union Budget 2016-17, stating, “Addition of 1 per cent FOB value of exports in custom duty-free for specified fabrics would enable garment exporters to undertake production of those garments, where they were not competitive. In the year 2016-17, fabrics, worth around Rs 1,000 crore (1 per cent of Rs 1 lakh crore), would be eligible for imports, and custom duty of Rs 110 crore would be saved by garment exporters.
This will open up avenues for new product development. It would provide additional exports of Rs 2,500 crore in a complete year.”
He further said, “Continuation of duty-free import of trimmings and embellishments to the extent of 5 per cent of FOB would facilitate additional garment export of Rs 5,000 crore in the full year (2016-17)”. The benefit of Notification No 41/2012 is now effective from 1/7/2012. Here the government has changed the post manufacturing drawback rate from 0.18 per cent to 0.21 per cent. This is subject to the passing of Finance Bill. The effect of this would be an additional 0.03 per cent drawback on service tax on garment exports on FOB value of exports. The total additional exports – Rs 7,500 crore in the full year 2016-17 is envisaged by the incentives announced in this budget, he added.
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Tirupur Exporters’ Association President Dr A Sakthivel also welcomed the nine pillars of his Budget — agriculture and farmers’ welfare, rural sector, social sector including healthcare, education, skills and job creation, infrastructure, financial sector reforms, ease of doing business, fiscal discipline, tax reforms to reduce compliance burden. He said that the focus of infrastructure and initiatives for “Ease of Doing Business” will go a long way in improving the economy as well as reducing the transaction cost. He also expressed his happiness on more allocation for skill development fund. He expressed his concern on the proposal of excise duty of branded readymade garments and made up articles of textiles with the retail sale price of more than Rs 1,000. This will adversely affect the industry and also difficult to administer, He added.
Dr A Sakthivel also said that basic customs duty on import of specified fabrics (for manufacture of textile garments for export) of value equivalent to 1 per cent of FOB value of exports in the preceding financial year being exempted is subject to the specified conditions.
