Everyone’s eyes are on the ensuing Union Budget 2021-22, which will be presented on February 1. With the official estimate that GDP growth can remain 7.7 per cent down in 2020-2021, right from common man to industry and Government, everybody is under pressure.
Many stakeholders of the industry don’t have high hopes from the Government as just a month back, it has allocated Rs. 10.683 crore for MMF and technical textiles industry under PLI scheme. But at the same time, it is also believed that looking at the condition of the industry, especially the plight of MSME, Government will come out with some support.
As usual, like every year, trade bodies have submitted pre-budget memorandums to the Union Minister of Finance Nirmala Sitharaman and requested to address the same.
Though most of the demands, be it policy level or specific to a cluster only, have been raised earlier also. But as they have not yet been fulfilled, in the changing scenario, these demands are likely to be focused upon such as changes in GST, few other existing schemes specific to workers.
Across the country, small garment manufacturers are of the strong view that the overall process of GST filling and refund is still very complicated and it is like a headache for them. So, this issue needs to be resolved. It should have a mechanism where a refund should come immediately and without much paperwork.
Secondly, the current distinction in GST rates below and above Rs. 1000 should be removed, and a uniform rate of 5 per cent GST should be applied. Though this decision can ultimately be taken only by the GST Council, the budget can certainly give an indication and direction to the Council to seriously consider this suggestion.
Normally, any ‘loss’ return in income tax would attract an automatic application of scrutiny. Considering that many firms will be showing losses this year, it is suggested that the mere fact that a firm has made a loss should not make it an automatic candidate for scrutiny.
As in 2020-2021 fiscal, many companies face a drastic drop in revenue and profits. Many companies could even end up sustaining losses. So, it is must that Banks should continue giving Drawing Power (DP) based on 2019-20 performance, and should not give weightage to the 20-21 numbers.
At least for one year, garment manufacturers should be offered working capital interest rates at the same rate as exporters. This will provide a huge relief to the domestic manufacturers.
Changes in existing schemes
Recently announced PLI Scheme (which for the Textile Sector has been converted to a FPLI Scheme) has set its qualifying criteria at a current base turnover of Rs. 100 crore. While in garment manufacturing, especially for the local market, there are only a miniscule number of manufacturers who would qualify for this criterion. So, to give a massive push to the avowed objective of pushing MMF sector ahead, the industry strongly believes that the minimum turnover criterion should be reduced to Rs 50 crore, for this scheme to be effective.
As far as other policy-level issues or demands are concerned such as the industry requirement of R&D support to various cluster and individual units, the industry insists to include special mention accounts (sma-1) and sma-2 category units under ECLGS scheme, market promotion support to reputed industry associations, remission of duties and taxes on exported products (RoDTEP).
The textile industry has also asked for capital and interest subsidies while the subsidy for a specific purpose like for solar energy plants has also been raised.
Time and again, various trade bodies and EPCs have strongly raised the issues of Anti-dumping Duty and information coming from power corridors is also hinting that something is cooking there. In last one year, the Government has also taken some positive steps in this direction. So, one can expect that the upcoming budget should have something in this regard.
The forthcoming budget is also likely to lay greater stress on removing some of the remaining inverted duties that discourage value addition.
Similarly, there are chances that the Government can announce something concrete about Mega Integrated Textile Region and Apparel (MITRA) Parks.
Across India, manufacturing clusters of the industry like Tirupur, Jaipur and Noida have demanded housing for labour. Looking at the recent bitter experience of migratory workers returning to their home towns during peak Covid time, now the industry is insisting that the Government should support in developing affordable housing nearby the factories. Jaipur and Noida-based exporters have strongly raised this concern.
Recently Prime Minister Narendra Modi unveiled the project for affordable housing; so such demands might be receiving some positive results soon.
It is also pertinent to mention here that demands like housing for labour is a very old demand and repeatedly raised.
Besides the above, a chunk of the industry expect support on the social security front also. They are looking at the Government exempting industry PF and ESI of workers and contributing the same itself.
Not only the industry, even states like Telangana have also come forward with their demand as the State Government recently wrote a letter to Ministry of Textiles and sought allocation of funds in the budget for the development of the Kakatiya Mega Textile Park (KMTP) and sanction of Mega Powerloom Cluster at Sircilla, besides other proposals.
Allocation in recent years
Though looking at the few recent years’ allocation to the Ministry of Textiles in the union budget, it will not be wrong to say that there is less hope monetarily for the industry (see table below)
|Year||Allocation (in Rs. Crore)|
On various platforms, Union Textile Minister has asked the industry to not look for subsidies while the industry is insisting for a level playing field to survive in the global competition; so Government support is must for the industry.