MUMBAI: With USD 15 billion worth of exports in FY'13-14, the cotton textile industry is seeking scrapping of import duty on textile machinery and interest rate subvention of three per cent for achieving 17 per cent growth in this fiscal.
In a pre-budget memorandum submitted to Finance Minister Arun Jaitley, Texprocil, a government constituted body for export promotion of cotton textiles, lists measures which can boost exports and provide employment to over two lakh people in India especially women.
"We are seeking duty cuts on textile machinery, continuation and enhancement of Textile Upgradation Funds Scheme (TUFS) and extending interest rate subvention of 3 per cent on rupee export credit to cotton textile exporters to mitigate the high cost of export finance, Texprocil Chairman Manikam Ramaswami told PTI here.
The high interest rate subvention is making textile exports costly compared to competitors. Interest rate on export finance in India is linked to the base rate and is, therefore very high as compared to competitors.
In the case of cotton textile sector, banks normally provide working capital loan for three months stock of cotton and insist upon 25 per cent margin money and the rate of interest charged is over 14 per cent. This puts huge pressure on the working capital requirement of the cotton textile sector, Ramaswami said.
The Government has extended interest rate subvention of three per cent on rupee export credit to exporters from certain sectors to mitigate the high cost of export finance. The same should be extended to the entire cotton textiles sector, he said.
Texprocil has also urged the FM that the Textile Upgradation Funds Scheme (TUFS) should be extended during the blackout period from June 29, 2010 to April 27, 2011 when the scheme was suspended to all cases which have been left out for no fault of the industry.
As regards customs duty on textile machinery, the present rate of basic customs duty is 5 per cent on a selected list of textile machinery and 7.5 per cent for the rest and the total duty works out to 28.34 per cent and 31.33 per cent respectively which are quite high compared to competitors from China and Pakistan, it said.
Texprocil has suggested that import duty on textile machinery, other than ring frames, should be reduced to zero so that the requirements of textile & clothing industry which cannot be met by domestic machinery manufacturing industry, can be met through imports, at a competitive price.
Ramaswami said, "Among the other measure which can boost the industry are withdrawal/reduction of customs duty/excise duty on furnace oil, abolition of excise duty on textile machinery, spares & components, reduction of central sales tax to 1 per cent and concessions on service tax."
Of the overall textile exports, cotton textile exports has the capacity to achieve a faster growth rate of around 17 per cent annually according to The Cotton Textiles Export Promotion Council, (Texprocil).
On the global stage, the Indian textiles industry overall has emerged as the second largest textile exporter after China in 2013-14 beating competitors like Italy, Germany and Bangladesh.
The rise in textiles exports from India is largely due to the growth in exports of cotton textiles (including raw cotton). Exports of cotton textiles (including raw cotton but excluding garments touched USD 15.18 billion which account for 67.46 per cent of the total textiles exports of USD 22.50 billion in 2013-14.