Business

Textile sector on road to recovery: SIMA

By Our Special Correspondent

Coimbatore June 4. The Southern Indian Mills' Association sees signs of recovery in the textile sector.

In a statement here, its chairman, V.S. Velayutham, pointed out that cotton exports had picked up during the first two months of the current fiscal (April and May). ``Overseas market sentiments have definitely improved and the increased shipments are proof of the same.''

In addition, the price had slightly improved ``notwithstanding undercutting by Indian mills as witnessed during most part of the previous financial year.'' This undercutting still continued, he lamented.

The improved sentiments in the international market had a cascading effect on the domestic front. With niche players concentrating on the export front, thanks to a buoyancy witnessed there, the others heaved a sigh of relief as supply pressure eased in the domestic market.

The domestic prices had firmed up by at least to Rs. seven to 10 a kg. However, this could be because of the excise component being absorbed increasingly by end-users.

Mr. Valayutham contended that cone yarn movement had ``definitely'' picked up with the removal of the excise exemption granted for hank yarn, and the mis-declaration of cone as hank had also declined.

The decision to increase drawback rates for handloom production would hasten the completion of the Central Value Added Tax (CENVAT) chain, which would benefit all segments of the textile industry. Besides, it would provide a level-playing field.

Excise duty evasion led to the industry's woes. ``Now that the Government has plugged the loopholes, with better enforcement, it is only natural that market sentiments should improve.''

At the same time, there should not be any let-up in the enforcement to curb duty evasion and mis-declaration.

However, slashing of the duty drawback rates on other textile products, including knitted and woven garments, would dampen export sentiments.

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