The Union Budget 2023-24 underlines the progressive vision of the government for holistic growth and steps to reach Vikshit Bharat. The garment industry hails the acceptance of the demand of AEPC by expanding the list of trims and embellishment under IGCR, which will help the RMG industry thrust exports, said Sudhir Sekhri, Chairman, Apparel Export Promotion Council.
The enhancement of limit under credit guarantee scheme for MSMEs in manufacturing sector, grant of one month wage to new entrants in all formal sectors up to ₹15,000, EPFO contributions for new manufacturing employees for four years, incentives for setting up of women hostels, dormitories and crèches and upgrading the industrial training institutes will help the garment industry scale up and be future ready.” Enhanced support to Cotton Corporation of India will help stabilise the cotton prices, he added.
SK Sundararaman, Chairman, The Southern India Mills’ Association (SIMA) said employment, skilling and MSMEs being the major themes of the Union Budget, the various announcements relating to these areas would benefit the labour intensive textile industry.
Credit guarantee scheme
The industry has been demanding the Government to announce a separate scheme for credit guarantee facility, as the highly vulnerable textile industry has been often facing financial stress due to external factors. He has said that the industry has been reeling under long drawn recession since April 2022, he said.
SIMA Chairman also welcomed the announcement of reducing the BCD on Methylene diphenyl diisocyanate (MDI) used for the manufacture of spandex yarn from 7.5 per cent to 5 per cent to address the duty inversion, enhancing the global competitiveness of textile goods manufacturers using such yarn. The use of spandex yarn has been increasing exponentially and hoped that the domestic manufacturers of spandex yarn would pass on the benefit to the downstream sectors.
ELI scheme
Sundararaman welcomed the allocations granted by the Finance Ministry for exports - Remission of Duties and Taxes on Exported Products and Rebate of State and Central Taxes and Levies with an increase of 5.8 per cent and 10 per cent for the year 2024-25 as compared to 2023-24. This is a much-needed boost when the textile exports are on the downward trend due to various external factors, he said.
This year Budget is sending a strong signal towards the importance of job creation and labour-intensive sector. The new employment-linked incentive ELI scheme will benefit labour intensive industries like textile and apparel, and this indicates the priority of our government in job creation initiatives, Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation.
Women’s participation
Increasing women’s participation in workforce will help industries as well as the overall economy. The new scheme of setting up women’s hostels in collaboration with industry will help SMEs also to build hostel eco-system which will promote workforce stability.
C+1 opportunity
Investment-ready “plug and play“ industrial parks in or near 100 cities will help the industries to improve their competitiveness. E-commerce export hubs will help SMEs to reach global audience and improve our exports.
Credit guarantee scheme for MSMEs to avail term loans will bring lot of comfort for the sector to take calculated risks to use the China plus One opportunity. PSBs, developing an in-house capability to assess the credit profile of MSMEs, will benefit, if it’s implemented in right spirit, he said.
Job creation
The Union Budget has provided various programmes to generate more employment and skilled labour under the heading of first timers and job creation in manufacturing, K. Venkatachalam, Chief Advisor, Tamil Nadu Spinning Mills Association.
On GST, Section 54(3) is omitted and this paves the way to avoid Blockage of Inverted Duty Portion on Export with Payment of Tax. Likewise, a new provision is introduced to waive off interest and penalty in certain matters by introducing Section 128-A.
However, the much-expected duty withdrawal of imported cotton has not happened as India is not growing the contamination free Extra Long Staple (ELS) Cotton. Further, the 45 days’ limitation period to pay for the MSME’s was not relaxed to leave the matter with in the scope of Buyer and seller, he said.