Manufacturers seek reduction in duty, incentives on exports

Vijay C Roy 

Tribune News Service 

Chandigarh, January 22

Having experienced pressure on exports across segments in the recent past, the textile sector, largely dominated by the SMEs, has sought certain concrete measures to boost exports. 

With an installed capacity of 7.5 million spindles, the northern region contributes 15% to the total capacity of the country. The total size of the domestic garment industry is around Rs 25,000-30,000 crore. Of this, woollens constitute 10-15%, with Ludhiana contributing 90% of the winter line.

In a memorandum submitted to Finance Minister Arun Jaitley through the Confederation of Indian Textile Industry, the manufacturers have demanded redressal of GST issues, lowering of tax rate and incentives. Most of these issues pertain to facilitating the manufacturing and exports. Their major demands are as follows:

Refund of accumulated input tax credit at fabric stage

Since fabric and its value added final products are goods consumed by the general public, input tax credit (ITC) may be permitted to be availed or refunded, thereby reducing the negative impact on the product of mass consumption.

Refund of excess input tax credit of job workers

The manufacturers have requested to allow refund of excess or accumulated ITC of job workers by categorising them as a goods manufacturer. This would not only help the industry become more competitive and save it from imports, but it would also help the MSME sector, as practically all the job work is done by them.

Exempt raw cotton from 5% Goods & Services Tax

The industry has demanded that cotton being an agricultural produce may be exempted from payment of GST when purchased directly from the farmers under the reverse or forward charge mechanism so as to reduce blockage of working capital at the time of procurement of inputs.

Reduction of GST on man-made fibre

The manufacturers have also sought reduction in GST on man-made fibres from 18% to 12% as it provides more jobs and fetches higher value addition.

Bring all petroleum products under the purview of GST

All petroleum products may be brought under the GST net so as to reduce the production cost by permitting seamless flow of input tax credit.

Abolition of customs duty on imported wool fibre

The apparel grade wool of fine micron (25 micron and finer) and other fine animal hair are not available indigenously in our country. Therefore, the woollen industry is dependent on imports. It is, therefore, necessary that import duty on wool fibre is withdrawn.

Textile Upgradation Fund Scheme subsidy

Adequate funds could be allocated to the Ministry of Textiles for releasing the TUFS subsidy within the given time frame to clear the arrears and to meet the committed liability for 2018-19. Adequate funds may also be provided to clear the pending TUFS subsidies.