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Excise
Duty on Man-Made Fibres |
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Currently
the mandatory duty on man-made
fibres is 16%, whereas duty applicable
to textile products manufactured
from man-made fibres is 8%, for
those who opt for cenvat. We request
that excise duty on man-made fibres
be reduced to 8% in order to encourage
increased use of manmade fibres
and to avoid accumulation of unused
credit with spinning mills. |
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Utilisation
of Accumulated Credit of AED (T&TA) |
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Following
the abolition of AED (GSI) and
AED (T&TA), Government has
allowed payment of Basic Excise
Duty (BED) through credit accumulated
on account of AED (GSI). However,
this facility has not been extended
to credit accumulated on account
of AED (T&TA). We therefore
request that accumulated credit
of AED (T&TA) may also be
allowed for payment of BED. For
those units that have opted to
stay out of cenvat chain, such
accumulated AED (T&TA) may
be refunded in cash. |
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Excise
Duty on Textile Machinery |
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There
is a large and growing textile
machinery industry in the country.
The improvements in the investment
climate for textile industry through
fiscal reforms have increased
the potential of the textile machinery
industry to grow even faster.
For this to materialize, the excise
duty on textile machinery needs
to be reduced to 8% from the present
16%. |
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Textile
machinery procured against EPCG
Licence |
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Textile
Machinery imported against EPCG
licence is not subject to any
CVD. However, such machinery procured
from domestic manufacturers against
EPCG licence is charged CVD/excise
duty, which is subsequently reimbursed
to the machinery manufacturer.
In order to simplify the procedure
and avoid delays, it is requested
that CVD/excise duty may not be
charged on machinery procured
from domestic producers against
EPCG licence. |
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Furnace
Oil |
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Most
of the textile mills are generating
their own captive power because
of shortage of power in the states.
The fuel consumed for power generation
is furnace oil. Because of steep
increase in prices of oil products,
the cost of furnace oil is also
increased substantially. At present,
central excise duty at the rate
of 16% is charged on furnace oil.
We would request that it may be
reduced to 8%. |
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Concessional
import duty on Textile Machinery |
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Industry
is grateful to the Government
for allowing certain machines
to be imported at concessional
rate of 5% import duty. But it
has been observed that machines
included for concessional duty
do not cover most spinning, weaving
and processing machines used by
the mainstream industries. We
are annexing a list of textile
machines (Annex-I) where indigenous
supply is either inadequate in
terms of quantity or uncompetitive
in terms of quality or price,
with a request that these may
be included for import by textile
industry at concessional rate
of 5% duty.
As indicated in the annex, the
concessional duty of 5% may also
be applied to parts of the machines
and components imported by textile
industry as well as textile machinery
manufacturers. |
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Import
duty on man-made fibre |
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More
than 95% of man-made fibre consumption
in the country is from domestic
production and only a handful
of producers account for most
of the domestic production. However,
customs duty applicable on man-made
fibres such as PSF, VSF Acrylic
Fibre, etc. is the peak rate of
20%. On the intermediary products
such as PTA, DMT and MEG also,
the current customs duty is 20%,
though paraxylene, which is a
raw material for the intermediaries,
attracts a customs duty of only
5%.
Since prices of crude oil have
increased considerably, polyester
prices have also increased tremendously.
Landed prices of imports plus
import duty is the price charged
by domestic producers.
Similarly, wood pulp for manufacture
of Viscose Staple Fibre (VSF)
is charged an import duty of
5%, whereas VSF itself has an
import duty of 20%.
There is a near monopoly situation
in man-made fibre production
in the country. Since imports
are unviable at current import
duty and therefore negligible
in quantity, the textile industry
runs the risk of becoming uncompetitive
in the international markets.
We, therefore request that
the Customs Duty on all man-made
fibres and their intermediaries
such as PTA, DMT and MEG be
reduced at least to 10%.
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Furnace
Oil |
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Custom
duty on furnace oil at present
is 15%. Since it is a major input
for textile industry to generate
power, we would request that the
duty may be reduced to 10%. |
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Depreciation
on Textile Machinery purchased
under TUFS. |
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Currently,
a depreciation of 50% is applicable
on Plant and Machinery used in
weaving, processing and garmenting
sectors of textile industry, purchased
under Technology Upgradation Fund
Scheme (TUFS) on or after 01-04-2001
but before 01-04-2004 and put
to use before 01-04-2004. Since
TUFS has since been extended up
to 31.3.2007, it is requested
that the accelerated depreciation
may also be extended to machines
purchased up to that date. Modernisation
and expansion are urgently required
in all the segments of the textile
industry in order to cater to
the expanding and exacting requirements
of the domestic and international
markets. It is, therefore, requested
that this rate of depreciation
be made applicable to all Plants
and Machinery purchased under
TUFS, instead of restricting it
to weaving, processing and garmenting
sectors. |
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Debt
Restructuring Package for Textile
Industry |
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ICMF
had submitted a detailed proposal
to Government in 2002 for establishment
of a Debt Reconstruction Fund
for restructuring high cost loans
of viable and potentially viable
textile units. The proposal was
based on a study undertaken by
a reputed professional consultant.
A Steering Group appointed by
Government had also made a similar
recommendation. Government has
announced in September 2003 a
Package for restructuring the
debt portfolios of viable and
potentially viable textile units.
However, the package is based
on additional facility of External
Commercial Borrowings (ECB) to
be provided to the Financial Institutions
(FIs) and banks and not based
on a Fund to be created by Government.
FIs/Banks have been finding
it difficult to operate the
Package for technically and
potentially viable units which
are currently facing financial
difficulties. ECB facility apparently
does not compensate for the
reduction in interest rates
adequately in such cases. As
a result, financial institutions
/ banks have taken up only the
cases of currently viable units
for restructuring.
Since the real target of debt
restructuring is technically
and potentially viable units
currently facing financial difficulties,
it is urged that Government
may establish a Fund as recommended
by the Steering Group that had
been appointed by Government,
rather than operating the Package
on the basis of ECB facilities.
The fund required for the purpose
from the Government would be
negligible compared to the advantages
in converting NPAs into standard
assets, improving textile output
and export performance and above
all increasing employment opportunities
in this most labour intensive
industry.
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Abolish
Textiles Committee Cess |
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The
Government has been collecting
Textiles Committee Cess from 1975-76.
The Cess was introduced for funding
the activities of the Textiles
Committee. However, the amounts
collected have been several times
higher that the funding requirements
of Textile Committee. The interest
on excess funds collected so far
will be more than sufficient to
fund all the current activities
of the Textiles Committee. Recently,
Textile Committee has raised demand
for cess from certain segments
of the industry which were not
paying Textile Committee Cess
in the past. ICMF would request
that the Textile Committee Cess
may be abolished immediately and
the demands raised on new segments
of the industry may be withdrawn. |
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Facilitate
Debonding of EOUs |
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With
removal of import restrictions
and reduction of import tariff,
textile EOUs are increasingly
becoming unviable. It is therefore
requested that the procedure for
debonding of EOUs may be simplified,
so that those EOUs which find
themselves unviable can debond.
Our specific suggestions in this
regard are enclosed at Annex- |
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De-Reservation
on Knitting and Knitwear |
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Though
woven garments have been removed
from SSI reservation a few years
back, knitting and knitwear both
continue under SSI reservation.
World-class factories are required
in the knitting and knitwear sectors
in order to meet the opportunities
unfolding in quota free markets.
We would, therefore, request that
all products in the knitting and
knitwear sectors may be removed
from SSI reservation. |
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Annex-I
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List
of Additional Textile Machinery
for Concessional Import Duty at
5 % |
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Annex-I
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All components for textile
machinery may also be allowed
at 5% import duty.
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