Budget measures to perk up textile sector

ENS ECONOMIC BUREAU

MUMBAI, FEB 27: Budget measures will perk up the prospects of players in the composite textile sector. The beneficiaries include Arvind Mills and the beleguered Birla group firm Century Textiles. But it may prove disastrous for the powerloom sector. The industry is also excited by the fact that the finance minister has finally confirmed the implementation of technological upgradation fund but was surprised by the inclusion of spinning sector in the funds' purview.

Originally, the spinning sector was not supposed to be included within the fund's ambit.Overall, the industry will accrue the following benefits:

Textile exports will get a boost as the pre-shipment as well as post-shipment credit rates will be tagged onto international standards.

Transaction cost in the sector is likely to come down as the budget promises certain measures in another three months.

Fortunes of small scale industry players will take a turn for the better as they have been exempted from taxes.

Modernisationin the spinning industry will come through as the sector has also been included in the technological upgradation fund. This is probably for the first time that the government has recognised the importance of credit rates at international levels. The availability of credit rates at competitive rates will improve textile exports, said industry sources.

"Currently, pre-shipment and post-shipment rates are very high. If it is available at international rates, textile exports will significantly improve," said DS Alwa, chairman,Texprocil.

Blended yarn manufacturers like Rajasthan Spinning Mills and Banswara Syntex will get benefit in the form of reduction in the excise duty from 20.7% to 18.4%. On the other hand, powerloom sector will have a tough time ahead as it will have to pay an effective excise duty of 9.2 % from the earlier level of 5.75%. While the spinning sector has got a shot in the arm with the inclusion of it in the TUF, it stands to lose from the decision to provide tax exemption to small scaleindustry players.

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