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Textile sector to get Rs3800cr worth duty sops |
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2004-7-14
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With the zero tax regime being introduced in the textiles sector the government stands to lose Rs 3,800 crore. But according to Textiles Minister Shankersinh Vaghela, the loss will be more than offset by the consequent improvement in investment and employment opportunities in the sector.
“We are aware that the zero duty regime will lead to a revenue loss of Rs 3,800 crore, but this is a small price to pay for the benefit of small textile units that have been freed from the inspector raj. The new tax structure will bring in more investment and generate more employment, production and more exports. We are estimating that foreign exchange earnings from textile exports will now double,” Vaghela said.
Criticising the previous government''s attempts to introduce a uniform Cenvat chain in the textiles sector, the minister pointed that over 40 exemptions in the sector rendered the system faulty.
He also spoke of the impact of the faulty system leading to inspector raj and small textile units suffering unnecessary harassment.
The minister also justified the decision to maintain higher duty on man-made yarn and fibres.
“India has been a traditional grower of cotton and our cotton muslin has been world famous. Since most cotton growers and producers are in the small scale sector they need encouragement. The demand to reduce excise duty on man-made fibre is being made by a small section of organised big players,” he said.
The Budget reduced the excise duty under the optional Cenvat route to 4 per cent on cotton yarn, fabrics, garments and made-ups, while man-made fibres have been put under a mandatory excise duty of 16 per cent and polyester filament yarn (including textured yarn) at 24 per cent.
Import duty reduction of 5 percent on textile machinery would help the sector to upgrade its technology for the post-quota regime, which will become effective from January 1, 2005.
With the cut in import duty the Duty Entitlement Passbook Scheme rates for textile exporters will also come down. |
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