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The Budget proposals have announced leapfrog changes in indirect taxes, especially addressing long awaited reductions in Cenvat rate to 14 per cent, reduction in excise duty for pharma and automotive sector and selective changes in Customs duty. Reduction in excise duty will certainly be anti-inflationary, but importantly along with higher disposable income will spur growth in domestic consumption that will be the driver for growth and investment in manufacturing sector. C envat reduction also reaffirms moving forward to a moderate rate GST by 2010. However, it has been a modest budget for textile industry maintaining staus-quo when the industry is reeling under pressure due to stronger rupee. Having accomplished the excise duty as well as custom duty reforms for the indusrty, reduction and rationalisation of import duty on cotton to zero per cent was expected to provide relief when cotton prices rule all-time high. Labour-intensive industries like textile and leather, where exports declined for the year by 22 per cent due to strong rupee, were expecting relief measures, besides correcting the fibre import duties. Thus, the Budget has disappointed these industries.

Naishadh Parikh, Director, Arvind Mills Ltd.

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