The Future, as usual, is Bright. But…..


Let’s examine the 2018-19 Union-Budget’s key points alongside the industry’s plight:

  1. The proposal to provide an outlay of Rs. 7148 crore for the textile sector in 2018-19. The industry feels that a large part of the increase in allocation will go to the state-owned Cotton Corporation of India (CCI) for ensuring the enhanced minimum support price (MSP) operations and hence, won’t be of much help to the industry.
  2. The proposal to increase the allocation for Remission of State Levies (ROSL) – scheme came into effect on Sept 20, 2016 – from Rs 1,855 crore in 2017-18 to Rs 2,163.85 crore. The industry leaders claim that the actual requirement of the RoSL funds for the apparel sector till March 31, 2018 is Rs 5,000 crore. On an average it is estimated to be about 3.5% of the FOB value of garments. The total RoSL amount allocated is not sufficient to cover the huge backlog even for the year 2017. Its high time the government realizes that the delay on its part to clear the long pending RoSL benefits, IGST refunds and other dues is causing businesses to suffer.
  3. The import duty on the pure silk has been increased from 10 per cent to 20 per cent to benefit the local pure silk industry people by protecting them from cheap imports from China. Silk apparel exporters are unhappy as they depend on cheap imports of raw material. Small silk producers happy with the support. Nothing can be done.
  4. The corporate tax on MSME (Micro, Small and Medium Enterprises) sector has been reduced from 30% to 25% for companies with a turnover of up to Rs 250 crore. Most units come under this turnover limit. A welcome step without any doubt.
  5. The Budget has a proposal to amend the Employee Provident Fund (EPF) scheme to reduce women employees’ contribution from 12% to 8% for the first three years of their employment. Just an illusion. Taking home more money is not getting more.
  6. The allocation for the Amended Technology Upgradation Fund Scheme (ATUFS) has been increased from Rs. 1956 crores to Rs. 2300 crores. The industry hopes this would mean that companies will get their arrears faster. Nothing more!
  7. The Budget proposes a reduction in the minimum employment period from 240 days to 150 days – for the new employees – necessary for the employers to claim the 30% deduction in Income Tax on emoluments paid to such eligible new employees. This IT deduction will also be allowed even for those new employees who are employed for less than the minimum period during the first year but continue to remain employed for the minimum period in the subsequent year. Clearly, a very good step for motivating employers to hire more, grow more.

All said and done, the ground reality, however, remains that the topmost and immediate concerns of the textile and garment sector have remained unattended. The fact remains that the SMSEs in the textile and apparel sector have not yet recovered from the wounds of demonetization and the GST implementation. Textiles has been the most affected sector from these shocks. A huge number of these businesses see no hope for the immediate recovery. Also, the menace of cheap imports from China is having a ‘killing effect’ on them. These issues are not being strongly raised by them in public. The issue that is totally missing is the dirty tricks being adopted to bring large quantities of Chinese goods into the country via official channels. The industry leaders have drawn the attention of the government to these major issues that are directly and seriously impacting them. But they have done so only after lauding the government and expressing their gratitude to the ministers. Their silence is revealing.

The future, as always, is bright but highly uncertain, difficult and challenging! What say?

Managing Editor

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