As the textile and clothing sector strives to reach a $360 billion market by 2030, including $100 billion in exports, it anticipates that the budget will lower import taxes on raw materials. Additionally, industry associations are advocating for tax breaks for exporters and a direct benefit transfer scheme for cotton growers.
The government has been requested by the Confederation of Indian Textile Industry (CITI) to lower basic customs taxes on important raw materials like filaments, man-made fibers (MMF), and chemicals like monoethylene glycol & purified terephthalic acid.
In comparison to rivals like Bangladesh and Vietnam, which enjoy duty-free imports, Indian manufacturers are at a disadvantage due to high tariffs, which drive up production costs. According to a CITI executive, “expensive raw materials weaken the cost competitiveness of Indian textile products.” “Import duty reduction is essential to reaching the sector’s aggressive growth goals.”
A DBT system has been suggested by the CITI as a replacement for the existing minimum support price (MSP) procurement paradigm. Farmers would sell cotton at market prices under the scheme, and if prices dropped below MSP, the government would credit their accounts with the difference.
A cotton price stabilization fund, proposed by the CITI, would provide mills with loans at lower interest rates, longer credit terms, and lower margin money requirements. Significant tax breaks have also been demanded by the Apparel Export Promotion Council for the next budget, which Finance Minister Nirmala Sitharaman is scheduled to give on February 1.
“India’s competitiveness against nations like Bangladesh and Vietnam was harmed by high import duties on machinery,” AEPC chairman Sudhir Sekhri stated. “Efficiency and output would be increased if these duties were eliminated.”
