Date:02/03/2006 URL: http://www.thehindubusinessline.com/2006/03/02/stories/2006030202160500.htm

Back Increase in TUF, cut in excise duty welcomed

Rahul Wadke

A positive step towards expansion of the textile industry

BUOYANT MOOD: Exports of Indian made-ups, facing stiff competition from SAARC countries, would also benefit from the reduction in excise duty.

Mumbai , March 1

The textile industry is in a buoyant mood due to reduction in excise and import duties for the sector. The Rs 100 crore increase in budgetary allocation for the Technology Upgradation Fund (TUF) is seen as a positive step towards expansion of the industry.

According to Mr R.L. Toshniwal, Chairman, Synthetic & Rayon Textiles Export Promotion Council, increase in TUF will enable the industry to face the rising global competition from China and other textile producing countries. However, the amount is inadequate to meet the growth requirements of the industry, dogged by outdated technology, he said.

Mr Toshniwal said the reduction in excise duty on man-made fibres and yarns from 16 per cent to eight per cent would go a long way in increasing the competitiveness of Indian synthetic and blended textiles in the world markets.

According to Mr Gautam Singhania, Chairman and Managing Director, Raymond Ltd, increase in TUF allocation and reduction in excise duty on synthetic fibre is a welcome step. Unfortunately there is no mention in the budget about labour reforms, which is key to the industry's growth, he said.

Mr Sanjay Lalbhai, Managing Director, Arvind Mills Ltd, said cotton textile sector was already having optional excise duty whereas non-cotton or synthetic fibres were attracting 16 per cent excise duty. Thus, spun yarn and blended fabrics were at a disadvantage over cotton textile. The reduction in excise and import duty on these fibres and yarns has brought in parity, he said. Exports of Indian made-ups, facing stiff competition from SAARC countries, would also benefit from the reduction in excise duty.

According to Mr B.K. Patodia, Chairman, Cotton Textiles Export Promotion Council, duty cuts would give an impetus to exports of blended items such as polyester-cotton made-ups and fabrics in which India is currently being out-priced by countries such as Pakistan, China, Indonesia, Thailand and Turkey.