Good Budget, but excise duty a sore point: CITI

The Confederation of Indian Textile Industry (CITI) has welcomed the Union Budget, saying it focuses on employment opportunities and skill, which makes textile industry a significant contributor to job provider and supporting skill development jointly with NSDC.

In a press release, it said the textile industry welcomes the new initiatives for job creation where the government will absorb 8.33 per cent of EPF amount for a period of 3 years for incremental workers who are on the rolls of company.

CITI hailed that the present regime of optional Excise Duty, remains unchanged for Spinning, Weaving and Processing, and for accepting Industry recommendation to integrate Textile Value Chain on introduction of GST. However, levy of Excise Duty on branded garments seems inconsistent and premature when GST introduction is not too far away.

It said that while the garment industry is poised to provide employment, the global markets are not performing well and exports are falling, which would obviously increase reliance on domestic market. This reintroduction of levy of Excise Duty on branded garments that is at the end of the Textile value chain could have been postponed till the integration with GST covering the full Textile Value Chain.

Naishadh Parikh, Chairman, CITI said, “Reduction in Customs Duty from 5 per cent to 2.5 per cent on specified fibres and yarns is a welcome step and should succeed in reduction in the cost of such fibres and yarns for Spinners and Weavers.”

Basic customs duty on import of specified Fabrics to manufacture garments for export will now be allowed to import fabric at 1 per cent of the FOB Value of exports at zero rate of Customs Duty in the preceding financial year.

"Trust, above imports are restricted to MMF fabrics where Indian fabric manufacturers are yet to catch up with their peers. As far as cotton fabrics are concerned, Indian manufacturers are at par. The concession is against the spirit of Advance License provision and we hope that it is temporary and will reduce in scope and period. The move to reduce Customs Duty on specified fibers and yarns would certainly improve India’s competitiveness and need for such special import concession can be done away with,” Parikh added.