Textile Ministry considering fiscal relief for exporters

Ahead of the Budget 2009-10, Textiles Minister Dayanidhi Maran today said efforts will be made to provide fiscal relief, including service tax exemption, to textile exporters reeling under waning global demand.     

"As a part of the short-term strategy, the government will strive to rationalise fiscal structure, exempt service tax, reduce interest rates on pre- and post-shipment credit, and facilitate faster clearance of arrears of terminal excise duties and central sales tax," Maran said while releasing a study on impact of global slowdown on Indian textile and clothing industry here.     

India's textile exports declined by about 2 per cent to $21.75 billion in 2008-09 as demand slumped in the US and EU, which account for over 60 per cent of overseas shipments.     

Maran said that in the long run there is a need for labour law reforms and improvement in infrastructure for providing relief to the $63.4-billion industry.     

He said the ministry would strive to create 10 million additional employment opportunities in the sector, which provides direct employment to about 330 lakh people.     

The industry has been making a strong case for a tax relief in the Budget, to be presented in the first week July.

The ministry will soon start a consultation process to form a National Fibre Policy. At present, different fibres like cotton and synthetics are given different tax treatments, creating distortions in the industry.     

Maran said there is a need to diversify exports to new markets like Gulf Cooperation Countries like Bahrain, Kuwait, Oman, Qatar and UAE, Africa, Latin America, Russia and Ocenia.     

"The government will extend a helping hand to the industry to seek opportunities in the new markets, to withstand competition from our neighbouring countries and overcome protectionist measures being adopted by developed countries," he said.     

Meanwhile, the study said the major policy aspects which are impacting the growth of textile and clothing industry includes, stringent labour laws and delay in disbursement of Technology Upgradation Fund Scheme.     

It said that steps like removal of infrastructural bottlenecks, rationalisation of taxes and flexibility in labour laws can help the industry for achieving higher growth rates.     

India's textile and clothing industry contributes 4 per cent to the GDP, 14 per cent to industrial production and 12 per cent to export earnings of the country.