Textiles Minister hails Budget Proposals for textiles sector

Thiru. Dayanidhi Maran, the Textiles Minister has hailed the Budget Proposals for the Textiles Sector as a growth spurring initiatives which dovetail with economic revival, infrastructure development, agriculture development, inclusive growth and restoring export growth. He said that he is proud that handlooms have been recognized for their role in providing employment as well as an instrument to preserve the magnificent and ancient textiles traditions of our country and have been supported, as has the carpet and powerloom sector.

Briefing media persons, Thiru Maran said that the Budget proposals should be read with the two stimulus packages announced by the Government in the recent months to boost exports.

Thiru. Maran stated that the Budget enhances the Plan allocation for the Ministry of Textiles to Rs.4,500 crore from Rs.4,090 crore, the Technology Upgradation Fund Scheme (TUFS) has been allocated Rs.3,140 crore, which will spur modernization and attract investment in the Textiles Sector and clear the pending backlog till June 2009. For the Scheme for Integrated Textile Park (SITP), Rs.397 crore has been allocated, which will impart momentum to the Scheme.

The Union Finance Minister also announced the setting up of 5 Mega clusters: one handloom mega cluster each in West Bengal and Tamil Nadu and one powerloom mega cluster in Rajasthan and two mega clusters for carpets at Srinagar (J&K) and Mirzapur (UP). These mega clusters, when operationalised, will generate employment for 50,000 people and attract an investment of approx. Rs.1,400 crore.

Thiru. Maran said that in coming days, we are going to converge with certain other announcements particularly empowerment of weaker sections, welfare of workers in the un-organised sector, facilities for the growth of medium and small scale enterprises to utilize fully the assistance under Schemes outlined in the Budget. Thiru. Maran said “ we have a huge task cut out before us to utilize the provisions of the Budget for making our sector go from strength to strength”.

The Budget Proposals which will have a substantial impact on the growth of Textiles sector are as follows:-

BUDGET OUTLAYS
(1) Central Pan outlay enhanced to Rs 4500 crore from Rs 4092 crore..Out of this, TUFS-provided Rs 3140 cr ,SITP- Provision of Rs 397 crore , Rs 340 cr for Handloom and Rs 220 cr for Handicrafts Schemes.

Five Mega Clusters
(2) One handloom mega cluster each in West Bengal and Tamil Nadu and One powerloom mega cluster in Rajasthan to be set up. New mega clusters for carpets also to be set up in Srinagar and Mirzapur(UP)

DIRECT TAXES-BENEFIT TO EXPORTERS

(3) Adjustment Assistance Scheme to provide enhanced Export Credit and Guarantee Corporation cover at 95% - extended up to March 2010

(4) Allocation for Market Development Assistance Scheme enhanced toRs. 124 crore

(5) Interest subvention of 2% on pre-shipment credit extended beyond current deadline of 30th September, 2009 to March 31, 2010

(6) Sun-set clauses for deduction in respect of export profits under sections 10A and 10B of Income Tax Act extended by one more year

(7) Fringe Benefit Tax to be abolished

SERVICE TAX
(8) Two taxable services, namely, ‘Transport of goods through road’ and ‘Commission paid to foreign agents’ to be exempted from the levy of service tax, if the exporter is liable to pay service tax on reverse charge basis. However, present cap of 10% on commission agency charges is retained. Thus there would be no need for the exporter to first pay the tax and later claim refund in respect of these services.

(9) For other services received by exporters, service tax exemption to be operated through the existing refund mechanism based on self-certification of the documents where such refund is below 0.25 per cent of FOB value, and certification of documents by a Chartered Accountant for value of refund exceeding the above limit

(10) Export Promotion councils and the Federation of Indian Export organizations (FIEO) to be exempt from service tax on the membership and other fees collected by them till 31st march 2010.

CUSTOM DUTY
(11) Custom Duty on Cotton waste and wool waste to be reduced from 15% to 10%

EXCISE DUTY
(12) Excise Duty on man made fibre and yarn to be increased from 4% to 8%

(13) Excise Duty on man made and natural fibres other than pure cotton beyond the fibre and yarn stage to be increased from 4% to 8% under the existing optional scheme – will ease the problem of credit accumulation

(14) An optional excise duty exemption to be provided to tops of manmade fibre manufactured from duty paid tow at part with tops manufactured from duty paid staple fibre.
 
Ministry of Textiles