Union Budget 2008 | Assocham moots tax holidays for textile eqpt

Union Budget 2008 | Assocham moots tax holidays for textile eqpt
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First Published: Wed, Jan 16 2008. 01 34 PM IST
Updated: Wed, Jan 16 2008. 01 34 PM IST
New Delhi: To reduce cost and attract fresh investment in the textile industry, Assocham has suggested Rs.declaring tax holidays’ for foreign and domestic investors in textile machinery segment; reforms to minimize procedural and bureaucratic hurdles and introducing Chinese method of compensation by linking wage bill with output level.
The World Bank, in its report has forecasted higher growth rates of 3.6% and 3.3% in the region of Middle East & North Africa and Sub-Saharan Africa respectively, for the period of 2008-2030 as compared to 2.4% growth for high income countries like US and Euro Area. While only 12.5% and 9% of textile exports are directed towards Africa and Middle East, the share of garment exports is even less at 1.3% and 8.7%.
Huge opportunities lie ahead for strategic expansion of India’s export market if the government steps up support. The high-risk nature, massive investment and unstable economic conditions in the short-term especially in African region, calls for the special fiscal and monetary incentives to be given for the new ventures for a specified time period.
In a proposal submitted to the Ministers for Textiles and Finance, the chamber has stated that alongwith policy initiatives, firm level changes were also needed to strengthen the production base of the textile sector.
Key Recommendations
* Planning tools like materials requirements planning (MRP) and Just-in-time (JIT) which are almost non-existent here, need to be introduced within the Indian context
* Further opening up of textile sector sans delays by reducing customs duty on import of textile machinery and equipment for minimum next five years needed
* Removal of excise duty on domestic production will promote healthy competition and encourage R&D in the segment
* Relook all schemes in various sub-segments of textile industry; bring them under single umbrella to realize actual benefits and scrap non-performing schemes and make adequate budgetary provisions for those that are doing well
* Put in place a mechanism to reimburse non-cenvatable transaction costs and levies borne by textile exporters (in the range of 12% of Rs.FOB’ value of exports)
* Ease interest rates on export credit, premium for export insurances, speed up clearance of excise duty and central sales tax reimbursement to cushion losses of textile importers but provide boost to exporters
* Incentivize textile exporters to track down unexplored markets with high growth potential to establish strong foreign trade in US and Europe, where bulk exports take place
* Provide special incentives to firms ready to form joint ventures, partnerships, franchisee or takeover of foreign firms as this would not only help in expanding the market and creating brand value, but also cater to the latest technology needs of the industry
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First Published: Wed, Jan 16 2008. 01 34 PM IST