Textile industry plays a significant role in the economy contributing to over 13% of the industrial output, over 2% to the GDP of India. The industry employed more than 4.5 cr citizens and contributed 15% to the export earnings of India in FY 19. In addition to this, the support from the government has aided the industries effort to grow and contribute further. Government has been taking measures like reshuffling of GST rates, allowing refund accumulated taxes in case of textiles etc. With the bold reforms taken by government in the recent past including tax reforms, Skill India mission, RoSCTL Scheme for textile sector to defray / rebate the embedded taxes, etc. has helped the industry.
In this budget, Government has provided stimulus to the economy in form of liquidity and consumption related interventions in the backdrop of visibly slowing global economic growth, including India. It is very encouraging to note that the budget clearly laid out the government’s roadmap to position the economy for future sustainable growth. It is a well-balanced budget addressing many challenges and opportunities across sectors to give fillip to economic revival. All in all, through this budget, the government is trying to simplify the existing complicated processes like GST, Income tax filing and bring in efficiency and growth. In next few pages, we are covering reactions from the industry…
The Cotton Textiles Export Promotion Council (TEXPROCIL) has welcomed the Union Budget 2020-21 terming it to be positive, growthoriented and in the right direction. It has hailed the Scheme for Remission of Duties & Taxes on Exported products, abolition of anti-dumping duty on PTA, review of rules of origin, and various initiatives for MSME sector. Finance Minister Nirmala Sitharaman presented the budget in Parliament recently. “The budget has stated that the Scheme for Remission of Duties & Taxes on Exported products will be launched this year, which will refund the duties and taxes levied at the Central, State and local levels, such as electricity duties and VAT on fuel used for transportation, which are currently not getting exempted or refunded under any other existing mechanism. The implementation of this scheme will certainly go a long way in improving the competitiveness of the textiles products in the export markets,” said KV Srinivasan.
On abolition of anti-dumping duty on PTA, he said, “This is an important decision as PTA is a critical input for the textile fibres and yarns and removal of the duty will make its availability to the industry at competitive prices and give a boost to downstream value added product.” The proposed National Technical Textiles Mission with a fouryear implementation period from 2020- 21 to 2023-24 at an estimated outlay of rs. 1,480 cr will give the much needed encouragement to the technical textiles sector and provide the much needed breakthrough in product development, according to Srinivasan.
He also welcomed the various initiatives in the budget for the MSME sector such as increasing the threshold for audit of books of account from rs. 1 cr to rs.5 cr. “Provision to enable NBFCs to extend invoice financing to the MSMEs etc will also lead to ease of doing business for these units.” On imports, he said the decision to review the Rules of Origin under all FTAs, strengthening the safeguard measures to deal with surge in imports, and the review of all customs duty exemptions will protect the domestic manufacturers, which in turn will encourage “Make in India” initiative.
The Southern India Mills Association has thanked Prime Minister Narendra Modi for favourably considering the long pending demand of the industry and abolishing the antidumping duty being levied on Purified Terephthalic Acid (PTA) imported from different countries including China, Indonesia, Taiwan, Iran, Malaysia, in Union Budget 2020-21. PTA attracts anti-dumping duty from $27 to $160 per metric tonne depending upon the country of origin and India often faces shortage of PTA that curtails capacity utilisation of the polyester segment industry. “The announcement has come as a boost for PTA users and the entire man-made fibre textiles and clothing segment. This would greatly help the country to enhance its global competitiveness, boost exports and also enable domestic manufacturers to compete with cheaper imports,” he said. He also welcomed the proposal of curbing cheaper imports by imposing Rule of Origin and other safeguard measures on the FTA countries.
Welcoming the announcement of National Technical Textiles Mission by allocating `1,480 cr for the next four years, he said that as the country has been importing technical textiles to the tune of $16 bn per year, the Mission would help the industry to strengthen the technical textile segment by taking advantage of benefits already extended under different state textile policies and also the Amended Technology Upgradation Fund Scheme (ATUFS). He also appreciated the enhanced allocation of rs. 761.90 cr for ATUFS as against rs. 700 cr allotted during the previous year. Chandran also hailed the announcement of the Schemes for Remission of Duties & Taxes levied on export products, NIRVIK for extending competitive credit facilities and higher insurance coverage with lesser premium, and simplified procedure for claim settlements. He also welcomed the announcement of addressing inverted duty structure in the GST as textile industry has been suffering with huge accumulation of inverted duty of capital goods and certain services. The various announcements made including the abolition of dividend distribution tax paid by the companies, significant reduction in the personal income tax rate, Vivad Se Vishwas scheme enabling dispute settlement without any interest and penalty, and simplification of appeal provisions, GST returns, income tax returns, etc are also welcome features of the budget, said Chandran. While appreciating the various benefits and schemes announced for the farmers to double the income by 2022, Chandran appealed to the government to announce a special scheme for cotton development.
The removal of anti-dumping duty on purified terephthalic acid (PTA), announced in Union Budget 2020-21 recently, is the most important for the textile industry, according to The Clothing Manufacturers’ Association of India (CMAI). PTA is a crucial input for polyester production and the decision will benefit sarees, dress materials, and technical textiles. “The removal of anti-dumping duty on PTA was a long-standing demand of textile manufacturing value chain. This will potentially open up the man-made fibre (MMF) value chain, and give a fillip to the entire MMF industry and enhance its global competitiveness,” Rahul Mehta said. In addition to sarees and dress materials, home furnishing, sportswear industry, and other segments where polyester is used will greatly benefit from this move.
“Kudos to the Textiles Ministry and Prime Minister Narendra Modi for this very bold step,” Mehta said. “Other than this, there are several other measures which could benefit the textile industry, but they appear to be work in progress at this point of time – such as the National Technical Textiles Mission, a review of the Rules of Origin especially in our FTAs, a review of cheap imports of goods being made by the MSME sector, refund of all the taxes and levies for exports, and the targeting of making every district an export hub.”
The proposed financing of Invoices of the MSME sector could again be a huge benefit to the textile and apparel industry, which is largely comprised of MSME units, according to Mehta. “If indeed all these plans fructify as per the stated goals and objectives, this could be a landmark budget for the industry. By and large, a round of applause to Textiles Minister Smriti Irani.”
On behalf of apparel industry I would like to thank Hon’ble Prime Minister of India, Hon’ble Finance Minister, Hon’ble Minister of Textiles & Hon’ble Minister of Commerce and Industry for announcing a positive, progressive, growth oriented and forward looking budget and also for fulfilling a long standing demand of industry of abolishing the Anti-dumping duty on PTA. This will give the much needed boost to the entire textile & apparel value chain. AEPC congratulates the Finance Minister on effectively addressing some of the key issues of the sector especially in the areas of Ease of Doing Business. A dedicated Investment Clearance Cell proposed to be set up will provide “end to end” facilitation and support, 9000 Km of economic corridors, quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing, National Logistics Policy with single window e-logistics market with focus on generation of employment, National Logistics policy for making MSMEs competitive, rs. 1.7 lakh cr for transport infrastructure in 2020-21, simplified return with features like SMS based filing for nil return and improved input tax credit flow, enhancing digital connectivity, support for working capital, financing for MSMEs, 5 year exemption from audit for MSMEs & easing of tax filing for startups are some import steps towards easing the day to day functioning of MSMEs as also providing a conducive ground for investors.
The new NIRVIK scheme for higher export credit disbursements with greater coverage, reduced premium and simplified procedures for claiming settlements is a welcome step given the increased uncertainties in the global market. We look forward to further details of the scheme. For the Textile & apparel sector the National Technical Textiles Mission to be set up with four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of rs. 1480 cr can position India as a global leader in Technical Textiles (Development of rainwear, sportswear, retarded Apparel, fire resistance garment). The proposed strengthening of the Indian standards & rs. 3000 cr for skill development in 2020- 21 are complimentary steps in overall encouragement toward higher value & innovative products which can significantly contribute toward value added growth in exports. The council is studying the proposed Scheme for Revision of duties and taxes on exported products in which Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded. This is an important area where there has been significant shrinkage in policy support in last few months. The council is keenly looking forward to an effective substitution of MEIS scheme that has been withdrawn for the sector. The apparel sector presently has the ROSCTL scheme for refund of embedded taxes. However, the same is not adequate to provide a level playing field with other countries with preferential market access and to mitigate the still prevalent relatively high transaction cost.
Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration which is laudable. The DDT removal will make India a more attractive investment destination. The personal Income tax benefits will boost purchase power and boost consumption. Demand growth will increase GST tax collection. We would also to thank Hon’ble Finance Minister for the proposed review of the Rules of Origin criteria for FTA countries as we can see huge surge in import of garment from Bangladesh. However, a complimentary step in this direction would be expediting the FTAs with EU, Australia, Canada & initiating FTA with UK.
CITI welcoming the abolition of antidumping duty on purified terephthalic acid (PTA) in the budget, Rajkumar has said the sector can only achieve a market size of $350 bn by 2025 if raw materials are made available at a globally-competitive price. It also hailed the proposed National Technical Textiles Mission. The mission is important as India imports a significant quantity of technical textiles – worth $16 bn – every year, he said in a statement.
He said the decision to digitally refund duties and taxes levied at the central, state and local levels under the Remission of Duties or Taxes on Export Product (RoDTEP) scheme to exporters, such as electricity duties and valueadded tax on fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism at the earliest will help the exporters resurrect their position in the international market. He also thanked Finance Minister Nirmala Sitharaman for considering extension of the debt restructuring window by another one year for more than 5 lakh micro, small and medium enterprises.
He has welcomed the Union Budget 2020-21 presented by Finance Minister Nirmala Sitharaman in Parliament. Stating that the budget is a people-oriented one, he appreciated the government’s focus on three aspects – agriculture and farmer welfare, wellness, and education and skills. He said the measures announced in the budget will help for overall development of economy. “The allocation of rs. 100 lakh cr for investment in infrastructure will help to reduce the logistics cost as of now the poor logistics is one of the hindrance factors for attaining the export competitiveness by our units,” he added.
Welcoming the announcement on proposal of setting up National Technical Textile mission with an out lay of rs. 1,480 cr, he said it will boost the manufacturing of technical textiles in our country. He also welcomed the launching of a new scheme NIRVIK to achieve higher export credit disbursement, mainly to support small exporters. He further said that the step to give invoice-based loan from NBFCs will benefit MSMEs. “The government’s decision to ask RBI to consider for extension of MSME restructuring till March 31, 2020 is the need of hour to bail out the struggling MSMEs in Tiruppur,” he said.
Moreover, the digital refund of duties and taxes of centre, states and local bodies to exporters from this year will help to reduce time taken to refund the amount. Further, the removal of dividend distribution tax and rationalisation of personal income tax are bold steps and will help across the board. Overall, the budget has allocated rs. 3,514.79 cr to the Ministry of textiles against allocation of rs. 4,831.48 cr in 2019-20 budget. Of this, the fund allocation for Amended Technology Upgradation Fund Scheme (ATUFS) is only rs. 761.90 cr, while the pending claims to the industry is rs. 8,500 cr.
The Hon’ble Union Minister for Finance Nirmala Sitharaman has presented Union Budget 2020-21 in the parliament. Through the Budget 2020- 21 Government is intending to boost income and enhance purchasing power among people. This budget is woven around three prominent things – aspirational India to boost the standard of living; economic development for all; and building a humane and compassionate society Ronak Rughani, termed the Union Budget 2020-21 as an inclusive and progressive budget and congratulated Nirmala Sitharaman Hon’ble Union Minister for Finance for encouraging industry and commerce of the country through the Union Budget presentation. One of the prime focuses of the Budget 2020-21 is to extend restructuring MSME NPAs for one more year. The Budget has also increased the MSMSEs turnover threshold for audit to rs. 5 cr from existing rs. 1 cr.
Ronak Rughani lauded the initiatives for the MSMEs in the Budget and informed that the various announcements and deliverables announced by the Government in the Budget for the MSMEs will substantially empower the segment wherein most of the textile units operate. Another milestone of the Budget 2020-21 is the National Technical Textiles Mission with a four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of rs. 1480 cr. The Technical Textiles segment is the Sunrise sector in the entire textile industry in which nearly 90 percent of fibres used is of Manmade fibres. I am confident that with the commencement of this National Technical Textiles Mission, the Indian Manmade fibre textiles segment will be lifted to a greater height and per capita consumption of Manmade fibres in India will grow substantially. At the same time, this initiative will help in generating more employment in the country, he stated.
The investor-friendly initiatives taken in the Budget by abolishing the Dividend distribution tax is also likely to promote more FDI in the MMF segment including processing, textile machinery manufacturing, etc. in the country, Ronak Rughani, informed. Steps initiated towards boosting infrastructure will suitably address the existing infrastructural gap for export and structural issues in the country. The Budget has also taken steps for encouraging “Make in India” initiatives by protecting domestic manufacturing units. Moreover, digital refund of State & Central taxes to exporters will help the entire textile industry, he said.
The Budget 2020-21 has some important changes that is bound to have significant impacts on textile, apparel and fashion industry. Anti- Dumping Duty on PTA abolished: The budget proposed to abolish antidumping duty on PTA (Purified Terephthalic Acid). PTA being a critical input for textile fibres and yarns, it is easy availability at competitive prices is desirable to unlock the immense potential in textile sector which is a significant employment generator. The textile industry has been demanding abolition of anti-dumping duty levied on PTA for a long time, to remain globally competitive.
All industry leaders across board have applauded the removal of anti-dumping duty on PTA. This will potentially open up the MMF value chain, and give a fillip to the entire MMF industry and enhance its global competitiveness. India often faces shortage of PTA that curtails capacity utilization of polyester segment industry.
Abolishment of anti-dumping duty shall greatly help the country to enhance its global competitiveness, boost exports and enable domestic manufacturers to compete with cheaper imports. National Technical Textiles Mission: The budget proposed setting up of a National Technical Textile Mission with four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of rs. 1,480 cr.
All industry leaders across board have applauded the removal of antidumping duty on PTA. “This will give a major boost to Indian textile industry and will go a long way in helping downstream industry staying competitive. “The mission on technical textiles is welcome. This will help and encourage Technical textiles as a lot of fabrics we use in the sector are being imported. It will help in starting production of specialised input in our country and will encourage Investments and boost employment in the sector. The intent to review the rules of origin in FTAs is appreciated. Efforts should be put in to sign FTAs with USA, EU & South America countries to make exports competitive with other neighboring competitor’s countries. Industry hails RODTEP, NIRVIK & other schemes which will make the availability of higher export credit disbursements, reduced premium and simplified procedures for claiming settlements.
Scheme for Revision of duties and taxes on exported products where exporter to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded is an important area which has seen significant shrinkage in policy support in last few months. However, the sector has been experiencing a pressure on exports across segments in the past few years resulting into fall in exports. Apart from global slowdown witnessed recently, there are few other factors affecting Indian Textile / Garment industry which renders exports from India uncompetitive vis-à-vis other countries like Bangladesh, Pakistan, Vietnam, China which need to be addressed on priority.
The budget for – aspirational India, economic development and caring India, gives a long-term vision of the present government. The increase in taxpayer base in the last 4 years and thereafter, shall boost in revenue growth – so this budget foresees long term spending more on strengthening rural, agricultural, horticulture and service industry. The Vivad par Viswas Scheme to reduce pending litigations of more than 5 lac cases across India to settle the cases before 31st March 2020, without any interest or penalty is a thoughtful step. Besides, the waiving off of DDT (Dividend Distribution Tax) is a relief for corporates, as it will help in increasing liquidity.
Similarly, Nirvik scheme to allow benefits to small-time exporters will push forex. Support to the startups and MSMEs is an additional push towards uplifting the economy. Taxpayers Charter too is a big step to instil confidence to the taxpayers. However, reduction in personal tax rates is below expectations, especially after big cut in tax rates of corporates in Sept 2019. But overall, it is a visionary and practical budget. Hope it gives a new lease of life to the morally down market.
In this budget, Government has provided stimulus to the economy in form of liquidity and consumption related interventions in the backdrop of visibly slowing global economic growth, including India. It is very encouraging to note that the budget clearly laid out the government’s roadmap to position the economy for future sustainable growth—which will resonate well with both domestic and international stakeholders.
We welcome setting up of the National Technical Textiles Mission with an estimated outlay of rs. 1480 cr.
While the overall outlay and incentives for Textile and Garmenting sector, which is one of the highest formal employment generation industry, could have been significantly more – it is a well balanced budget addressing many challenges and opportunities across sectors to give fillip to economic revival.
The size of the technical textile industry in the country is approximately rs. 12,000 cr, excluding the hygiene industry.
The last time the sector received focus was a few years ago to set up six centres of excellence across the country. With the need to create a domestic base for raw material production, push for manufacture of high end technical textile products, boost investments, and increase per capita consumption, there is a need for a Mission.
National Technical Textile Mission with an outlay of rs. 1,480 cr is a great move by Finance Minister.
The bigger chunk of this investment must be utilised for skill development, tech and automation to get higher efficiency for faster and cost-effective.