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MAJOR DECISIONS AND INITIATIVES
TEXTILES
The UPA Government completes one year on May 21, 2005. During this period, the Government has taken several important initiatives. Some of these are being brought out in the series ‘Major Decisions and Initiatives’.
Several steps were taken by the Government during the last one year to increase the competitiveness of the textile industry. In the Union Budget 2004-05, the whole value addition chain has been given an excise exemption option except for mandatory excise duty on polyester filament yarn including texturised yarn, synthetic and artificial fibres and synthetic and artificial filament yarns. Additional Excise Duty on Textiles & Textile Articles (AT&T) and Additional Excise Duty (Goods of Special Importance) Act has been abolished. Basic customs duty on various textile machinery and spare parts has been reduced to 5 per cent.
Announcement made in the Union Budget 2005-06
The allocation to Technology Upgradation Fund Scheme (TUFS) has been enhanced to Rs.435 crore, along with an additional capital subsidy of 10 per cent for the processing sector. Thirty items of textile products and hosiery have been identified for de-reservation from Small Scale Industry. It has been announced that a Special Purpose Vehicle (SPV) will be created for improving infrastructure in manufacturing with an investment of Rs.10,000 crore. Excise Duty on Polyester Filament Yarn (PFY) and Polyester Texturised Yarn (PTY) has been reduced from 24 per cent to 16 per cent. The optional CENVAT Scheme has been extended to stand alone Texturising Units at 8 per cent excise duty with CENVAT credit or at nil duty without CENVAT credit. Peak rates of customs duty has been reduced from 20 per cent to 15 per cent. Duties on specified textile machinery items, raw materials and spare parts for manufacture of such machinery has been brought down from 20 per cent to 10 per cent. The existing concessional duty of 5 per cent on some other machinery is being continued.
Impact of Budget proposals
The decentralised sector namely, powerloom and handloom as well as small garmenting units have now been relieved of problems related to maintaining excise records and complying with excise procedures. The fiscal duty relief given in the Budget has led to reduction in the cost of production. Multiplicity of taxes has been done away with. It is expected that about one million jobs will be created in next five years in the textile sector. As a result, motivation for tax evasion would be discouraged.
Announcements in the New Foreign Trade Policy
The new Foreign Trade Policy contains a number of positive features, with a special thrust for Handicrafts and Handloom sectors. Duty free import of trimmings and embellishments for Handlooms & Handicrafts sectors increased from 3 per cent to 5 per cent of FOB value of exports.
The Government has de-reserved hosiery and knitwear from the SSI sector. Allocation to TUFS has been enhanced to Rs.435 crore, along with an additional capital subsidy of 10 per cent for the processing sector. This would go a long way in addressing the weakness of the processing sector in the textile value chain. In the direction of encouraging full fibre flexibility, excise duty on Polyester Filament Yarn (PFY) has been reduced from 24 per cent to 16 per cent. Duties on specified textile machinery items, raw materials and spare parts for manufacture of such machinery brought down from 20 per cent to 10 per cent. The existing concessional duty of 5 per cent on some other machinery has been continued. A Cabinet decision has been taken to amend the Factories Act 1947 to allow women workers in night shifts.
Infrastructure projects
Apparel Parks for Exports (APE) has been announced with the objective of setting up of modern apparel units at major growth areas. Under the Scheme, the Government gives grant upto Rs.17 crore per Apparel Park for infrastructure work, training and common facilities. Twelve Apparel Park projects have been sanctioned, and five such projects are expected to be completed by the end of the current year.
The first Apparel Park project was inaugurated by the Finance Minister on January 9, 2005 at New Tirupur. The Tirupur Apparel Park is expected to generate additionality in exports to the extent of Rs.1,500 crore per annum.
Textile Centre Infrastructure Development Scheme (TCIDS) had been introduced with the objective of modernising infrastructure facilities at major textile centres of the country. The Government gives grant up to Rs.20 crore for a particular centre. Sixteen TCIDS projects have been sanctioned, which are at various stages of implementation. Out of eighteen projects sanctioned, six are expected to be completed by the end of the current year.
The Ministry of Textiles is proposing to merge the two Schemes APE & TCIDS into one restructured “Scheme for Integrated Textile Parks” for speeding up the implementation of the Schemes and to actualise the vision of attaining the export target of $50 billion by 2010.
The Government has released of Rs. Seven crore during the current financial year for Apparel Training and Design Centre (ATDC). To enable apparel exporters to showcase their products and to provide a one-stop shop for reputed international buyers, the Apparel Export Promotion Council is constructing an Apparel International Mart at Gurgaon with assistance from the Government of India. The work for construction of the Apparel Mart is in progress, and it is expected to start functioning from October 2005.
The National Institute of Fashion Technology (NIFT) proposes to establish an institution of National Excellence for imparting Fashion Business Education with International Benchmarking. It also proposes to appoint a nodal agency for standardising and benchmarking Fashion Business Education in the country. It will set up an Apex Body to train the teachers / trainers imparting Fashion Business Education in the country.
Organised Sector
The Technology Upgradation Fund Scheme has been further fine tuned to increase rapid investments in the targeted sub-sectors of the textile industry. Under the Scheme, 3,159 applications with a project cost of Rs.18,467 crore have been sanctioned for a loan amount of Rs.8,505 crore and Rs.5,981 crore has been disbursed. The cost of machinery has been further brought down by reducing the customs duty on imports.
A considerably enhanced budget provision of Rs. 435 crore has been made for the financial year 2005-06. For the textile processing sector, a credit-linked capital subsidy @10 per cent, in addition to the existing 5 per cent interest reimbursement has been approved. For the decentralised powerloom sector, the capital ceiling for machinery has been enhanced from Rs. 60 lakh to Rs.One crore; and for the small scale textiles and jute industries, the rate of credit-linked capital subsidy has been enhanced from 12 per cent to 15 per cent. The positive impact of Budget 2004-05 and 2005-06 is clearly visible on the progress of TUFS. During 2004-05, the disbursement touched Rs.1,623 crore against Rs612 crore during 2003-04, which is an enhancement of 165 per cent over the previous year. During the year 2003-04, the subsidy disbursement was of Rs.249.07 crore, whereas during the year 2004-05 it was of Rs.283.60 crore which is an enhancement of 14 per cent over the previous year.
The Government has announced implementation of the Rs.3,900 crore rehabilitation schemes of the sick National Textile Corporation (NTC) companies which has been successfully carried forward. Permission has been obtained for sale of valuable NTC lands in Mumbai city in case of five NTC mills. Restructuring plan to achieve administrative economies has been successfully piloted through the Group of Ministers on NTC. Chronic sick mills of NTC have been closed and attractive VRS has been given to nearly 43,000 employees at a cost of Rs.1,650 crore. All the workers’ dues amounting to Rs.1,800 crore have been paid. This includes Rs.1,650 crore on VRS and Rs.150 crore dues to PF and ESI authorities.
In case of British India Corporation (BIC) permission of U.P. Government has been obtained for the conversion of leasehold lands into freehold which was pending for the past 3 years. BIC has started earning profit in its operations and rehabilitation scheme is being implemented successfully.
Wool Sector
A Pashmina Dehairing Plant was set up at Leh in J&K September 2004 with an expenditure of Rs.8.25 crore.
Sericulture
The production of all varieties of raw silk was 15,876 tonne in 2004-05, compared to 15,742 tonne during 2003-04. The exports of silk goods recorded an increasing trend by 21.1 per cent and 27.6 per cent in Rupee and dollar terms respectively during 2003-04 over 2002-03. During the April-January of the current year (2004-05) export of silk goods has increased by 8 per cent and 10.5 per cent in terms of Rupees and dollars when compared to the same period of 2003-04.
The Central Silk Board (CSB) has launched Futures Trading in Cocoons and raw silk through National Commodities and Derivatives Exchange (NCDEX) in January 2005. This is seen as an effective tool to cover the risks associated with price fluctuations. CSB has developed and installed Seri-Information KIOSKs to facilitate computerised public-interface aimed at dissemination of information to the public on the services and activities of Central Silk Board. CSB has also set-up an “Information Centre” at its headquarters at Bangalore to facilitate computerised public-interface aimed at dissemination of information to the public on its services and activities.
In June 2004, the Government has issued revised Policy Guidelines for “Vanya Silk cultivation” under the Forest Conservation Act, 1980 whereby cultivation of all varieties of Vanya Silk (Tasar, Eri and Muga) on its identified host plants in forests by the tribal and non-tribal rearers is treated as a forest-based activity.
Cotton Sector
During the current cotton year (October 2004 – September 2005) due to higher domestic as well as global cotton production, cotton prices touched the MSP level and the CCI has procured a record 138.49 lakh quintals of kapas under support price operations all over the country.
The Technology Mission on Cotton (TMC) has achieved success in increasing the productivity and reducing the contamination through upgradation of cotton market yards and modernisation of ginning & pressing factories. The contamination level of six per cent had been brought down to 2.5 per cent and the Government is aiming to bring it down to 1.5 per cent. Under the Mission, development of 112 market yards and modernisation of 429 ginning and pressing factories has been sanctioned at an estimated cost of Rs.751 crore, out of which Government’s share is Rs.195 crore. So far, work on 75 market yards and 272 factories has been completed and Rs.130 crore has been disbursed to the beneficiaries.
Jute Sector
For revival of NJMC, a High Powered Committee under the chairmanship of Secretary (Textiles) was constituted. The Committee held field visits and submitted its report based on which an action plan was submitted to the CCEA. The Government approved the action plan which involves grant of budgetary support to the extent of Rs.978 crore for offering VRS to all the employees of the organisation, liquidating statutory arrears, gratuity and other secured liabilities of NJMC. The question of revival of two units will be referred to BRPSE
The Planning Commission gave its in-principle approval to the Jute Technology Mission (JTM) at an outlay of Rs.458.34 crore. The Ministry of Textiles is the nodal ministry for implementation of JTM. The proposal is to be approved by the Cabinet Committee on Economic Affairs.
National Jute Policy 2005
The Ministry of Textiles held extensive discussions with various stake holders pertaining to jute sector and organised a two-day conference for the formulation of a Comprehensive National Jute Policy in November, 2004 at Kolkata. Based on the recommendations of the conference, the Ministry of Textiles formulated the National Jute Policy 2005, which was considered and approved by the CCEA.
Handicrafts Sector
New projects numbering 112, have been sanctioned to undertake Baseline Survey & Mobilisation under Baba Saheb Ambedkar Hastshilp Vikas Yojana, aiming to cover 30,572 artisans approximately and formation of 1800 Self Help Groups approximately. Sixteen new Common Facility Centers have been sanctioned in 10 States.
The export target for Handicrafts for the year 2004-05 has been fixed at US$ 2,500 million and for Carpets US$ 560 million. As against this target, exports of US$ 2,983.69 million under Handicrafts and US$ 508.97 million under Carpets have been made. The growth in exports in Dollar terms is 29.07 per cent for Handicrafts and 0.18 per cent for Carpets during April 2004 – March 2005 of this fiscal, as compared to same period last year. Under PM’s J&K Package, the Satellite Centre of IICT in Srinagar and Craft Development Institute (set up in a rented premises, as construction of building is in progress) have commenced functioning and a short-term training programme in carpet designing and design/ product development or handicrafts have commenced. The various interventions given under this package has generated additional employment of 20,208 so far, out of which, additional employment generation during April 2004 to March 2005 was 9,228. 797 work sheds have been sanctioned for handicrafts artisans in J&K and Rs.95 lakh have been released. A budget provision of Rs. 359.16 crore have been suggested under National Bamboo Mission for development of Bamboo Based Craft in India, including its marketing and exports. A project on energising the Indian Handicrafts Sector through promoting IT enabled micro credit delivery mechanism in rural India, development of a suitable organisational framework for empowering artisans through Self Help Groups and developing quality assurance mechanism including labeling and branding has been sanctioned in principles by UNDP with financial assistance of about US$ One million. A State-of-the-art Testing Laboratory has been set up as part of upgradation/restructuring of Metal Handicrafts Service Centre, Moradabad.
Handloom Sector
In order to adopt the cluster development approach for the production and marketing of handloom products. 20 clusters in the first phase would be taken up at a cost of Rs.40 crore, and the amount will be provided during the course of the year. The Government has been implementing a Life Insurance Scheme for handloom weavers which provides insurance cover upto Rs.50,000. At present, only two lakh weavers are covered. It is proposed to enlarge the coverage of the Scheme to 20 lakh weavers in two years which will cost Rs.30 crore per year when fully rolled out.
The Government has been implementing a Health Insurance Package for weavers. At present, only 25,000 weavers are covered. It is proposed to enlarge the coverage of the Scheme to two lakh weavers at a recurring cost of Rs.30 crore per year. Handlooms have been identified as a “thrust sector’ in the Foreign Trade Policy under new sectoral initiatives. The Government has decided to develop a trademark for Handloom on lines similar to “Wool mark” and “Silk Mark” to enable handloom products to develop a niche market with a distinct identity. It has also been decided to free the Handloom Sector from the CENVAT Chain.
Powerloom Sector
In January 2005, five Hi-Tech Weaving Park projects with Group Workshed Scheme components were approved in the States of Karnataka, Tamil Nadu and Andhra Pradesh, involving an expenditure of Rs.3,907.13 lakh. These Parks are likely to generate employment for 12,000 persons and to achieve an annual production of Rs.1,252.34 crore.
The number of persons covered under the scheme were 1,07,107, recording a jump of over 77 per cent during 2004-05 in comparison to the 60,338 covered during 2003-04. Six Powerloom Service Centres were modernised with a budget provision Rs.5.37 crore.
RK:LV
PIB SF-53 (17.5.2005)
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