Textiles industry seeks cut in excise duty on man-made fibres

Argues that the duty reduction will not lead to revenue loss for the government.

Apex industry chamber for textiles CITI today demanded that the government reduce excise duty on man-made fibres to 8% in the forthcoming Budget to boost the sector's growth.

In its pre-Budget memorandum to Finance Minister P Chidambaram, Confederation of Indian Textiles Industry (CITI) said: "The duty on man-made fibres and their raw materials may be reduced to 8% from the current 12%."

It argued that the duty reduction will not lead to revenue loss for the government.

"This may not lead to revenue loss since demand and therefore production will increase, leading to increased revenue," it said in a statement.

CITI said that increasing cost of production in China has opened up huge opportunities for Indian man-made fibre based textiles industry to expand its market share.

It has also sought abolition of customs duty and special additional duty on man-made fibres as it would help the industry to source fibres from global markets during the time of shortage or a sharp increase in domestic prices.

It also asked to increase the exemption limit for service tax to Rs 15 lakh from the current Rs 10 lakh. Besides, it has demanded reduction in rate of service tax to 10% from 12% to lessen the burden on the industry.

CITI has also suggested converting the mandatory duty of 12% on branded garments and made ups to 8% optional duty.

"Garments and made ups are the most labour intensive and the final products in the textiles chain and play a major role in creating and sustaining for all textile products," it said.

Further, to boost textiles exports, it has suggested to the Finance Minister that lending of export credit to the sector may be treated at par with lending to the priority sector in the matter of interest rates.

"The industry suffers disadvantages in the areas of infrastructure and input costs when compared with its competitors. Affordable export credit will assist in handling these problems partly," it said.

India's textile exports declined 5.9% year-on- year to $14.1 billion during the April-September 2012 because of slowdown in major markets like the US and EU.