Rolling Back of GST Hike, Stabilise Cotton Price are key Expectations of the Textile Sector from Union Budget 2022
Indian Textile sector has bounced back very strongly post unlock from COVID-19 slump. Slowdown in Chinese economy, anti-China sentiment has helped Indian Textile manufacturers and exporters to grab a bigger share in the global textile business and strengthen its presence in US and European Union markets. The textile industry feels that it is the opportune time for the Centre to provide appropriate support to the industry to fuel its next phase of growth and expect it is address in the upcoming Union Budget 2022.
Maj Gen OP Gulia, SM, VSM (retd) CEO, SVP Global Textiles Ltd.
Maj Gen OP Gulia, SM, VSM (retd) CEO, SVP Global Textiles Ltd., said, “Rolling back of GST hike, stable cotton prices, simplifying CAROTAR 2020 and incentivising use of renewal energy are some of the key expectations of the textile sector from the upcoming Union Budget of 2022. Despite concerns expressed by the industry, the Govt increased the GST on textiles from 5% to 12%, to be effective from 1 January, 2022. This will have a negative effect on the growth of the Textile Industry which contributes a major share in employment generation and export earnings. It is requested to keep the GST rates at 5% only.“
India has advantage of being the largest producer of raw materials including cotton and polyester along with skilled labour, high-tech machinery. It also has the second-largest yarn-spinning capacity in the world (after China), accounting for approximately 20 percent of the world’s spindle capacity.
“The cotton is the major raw ingredient (60%) and the prices of cotton have skyrocketed since the last 11 seasons. We request the Govt to stabilise the cotton prices. The Govt may set up a cotton price stabilisation fund scheme comprising 5% interest subvention or loan at NABARD rate of interest, reduction in margin money from 25% to 10% and increase in the cotton working capital limit from 3 months to 9 months,” said Mr. OP Gulia.
India is the second largest textile exporter in the world after China. India’s textile industry contributes 14 per cent of the industry production and 12 per cent to the country’s export earnings. Recently exporters are facing difficulty in clearance of import goods from FTA Countries in the wake of implementation of Customs Administration of Rules of Origin under Trade Agreements (CAROTAR), 2020. The industry expects Govt should simplify the clearance of import goods from FTA Countries.
“Textile industry is the major consumer of power. To encourage use of renewable power, the Govt must encourage and incentivise investment in green energy and eco-friendly technologies by offering tax benefits to the manufacturers. The China plus One is a big opportunity for India to grab. The world textile sector is going through an overhaul. India has the potential and with requisite Govt support it can fill the vacuum and attain a leadership role in Textile and Apparel sector,” said Maj Gen OP Gulia, SM, VSM (retd) CEO, SVP Global Textiles Ltd.