The Hindu Business Line : Textile exporters, retailers unhappy with Budget

Bangalore, March 2 Exporters and retailers in the textile and apparel industry are unhappy with this year’s Budget which offers no major sops or tax relief to the sector.

The export community is particularly disappointed that no announcement was made to bail out the ailing industry affected by a strong rupee.

Mr Rajendra Hinduja, Managing Director, Gokaldas Exports, says, “We were looking forward to the Budget day for help in this regard. But there are no announcements of any duty cuts. The Budget is silent on the industry.”

Mr Vikram Rao, Business Director - Textiles & Branded Apparel, The Aditya Birla Group, too, says the Budget has been a let down with no improvements in duty drawback or other export duty sops. “With no added incentive to off-set the significant adverse impact of rupee appreciation, the Budget would dampen the exporters’ bottom line.”

TUFS: No impact

On increased allocation under the Technology Upgradation Fund Scheme, (TUFS) from Rs 911 crore in 2007-08 to Rs 1,090 crore in 2008-09, textile players said it may be good in the long term, but it will not impact the industry’s current condition.

Says Mr Hinduja, “TUFS pertains to expansion and new projects. But the rupee equation has put expansion on hold or it is on a slow mode. This announcement will not have much impact given the present condition. However, it is good in the long run.”

Mr Rao says TUFS encourages propensity to invest. “But when profitability itself is questionable, increase in upgradation fund does not make much sense”, he adds.

Retailers disappointed

Retailers are also unhappy. “No action has been taken to cut service tax on rentals in retail. We were also expecting an increase in FDI for luxury brands. That too has not happened,” says Mr J. Suresh , CEO – Brands & Retails, Arvind Mills.

Mr Gautam Hari Singhania, Chairman & Managing Director, Raymond, too, says that from “a retailing perspective, the continuation of service tax on rentals is a dampener.”