Finance Minister Nirmala Sitharaman has announced in the Union Budget that exemptions are being provided to zippers, buttons and lining materials to incentivise textile exports from India, thus making it easier for exporters to manage liquidity. But economic relief is not expected as of now as tax amount on import of these items used to be refunded.
The industry said that it is the only relief for the textile sector against budget expectations as Finance Minister Sitharaman has ignored the industry’s demand for removal of duty on cotton imports. In her budget speech, Sitharaman said, “The items such as embellishments, trimming, fasteners, buttons, zipper, lining materials, specified leather, furniture fittings and packaging boxes are being exempted from duty to encourage exports. This will facilitate exporters of handicrafts, textile and leather garments, leather footwear and other items.”
According to the industry experts, buttons, zippers and lining materials are used in garments among the exempted items. These items are imported, which currently attract about 10 percent duty. Now exporters will not have to pay duty on their imports. However, exporters said that this is not going to bring any financial relief as it is being compensated through ITC under GST. But new provision will save their liquidity as they will not have to pay duty and get refund.
Raja M Shanmugham, President, Tiruppur Exporters Association, said that exporters are not going to get any financial benefit from this provision in the budget. Exemption from customs duty will allow them to get necessary import without paying duty for export of garments. At present, the exporters have to pay the duty. After two-three months, they get refund as ITC under GST. These items account for about 3-5 percent of the total production cost of the garment. Regarding the budget proposals for the textile industry, he said that the major demand for removal of import duty to check the price of cotton has not been accepted.
