To help the stressed textiles and garment manufacturing sector, the budget proposes to completely remove excise duty on cotton and spun yarn at the yarn, fabric and garment stages. "It is a major relief. The move will help garments, branded and unbranded, to see a four-five per cent price decline," said Rahul Mehta, president of the Clothing Manufacturers Association of India.
"The industry was operating on a very low margin and this will help improve these. At some stage, we will also look to pass on the benefits to end-users. Since we operate on a seasonal basis, orders for the summer season have already been booked at existing excise rates. Things should improve post June-July," said J Suresh, managing director, Arvind Lifestyle and Brands.
Industry experts, however, wish the finance minister had given a concession for polyester fibre, too. Still, "the gloom over the domestic apparel retail market should move away," said Prashant Agarwal, joint managing director at Wazir Advisors, an apparel retail consultancy.
Another news to cheer is the proposal to continue the Technology Upgradation Fund Scheme (Tufs) in the 12th Plan, with a focus on the powerloom sector, targeting an investment of 151,000 crore.
"Many companies did not go ahead with their expansion plans due to no clarification over Tufs. Now that there is clarity, companies will accelerate their expansion plans," said Sanjay Lalbhai, chairman and managing director of Arvind Ltd.
Also proposed is 2,400 crore for modernising the powerloom sector. For incentivising of apparel parks, a fresh allocation of 50 crore to the ministry of textiles for an additional 10 crore to each park.
"The 2,400-crore incentive as a part of Tufs could boost over 10 per cent growth in ordinary as well as shuttle-less looms," said Bharat Chhajer, former chairman of the Powerloom Development and Export Promotion Council. He says there are 2.25 million looms, of which 2.1 mn are semi-automatic and ordinary ones, the rest being shuttle-less powerlooms.
The new Integrated Processing Development Scheme in the 12th Plan, to address the environmental concerns of the textile industry, including improving the infrastructure for effluent treatment, is to get 50 crore this year.
To boost the handloom segment, Chidambaram announced working capital and term loans at a concessional interest of six per cent.
The sector has 150,000 individual weavers and 1,800 primary cooperative societies. For this, an additional Rs 96 crore in 2013-14 to the ministry of textiles.