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Thursday, Jun 06, 2002

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`Textile sector showing signs of recovery'

G. Gurumurthy


AFTER years the apex spinners body, the Southern India Mills Association (SIMA), has given a positive picture about the textile industry.

The SIMA has come out officially to say that the market sentiment in recent months has improved for cotton yarn both in export and domestic sale. The improved market condition could be felt through the increased shipments from India witnessed during the first two months — April and May — of the current fiscal.

According to the SIMA Chairman, Mr V.S. Velayutham, the yarn prices too improved in the overseas market notwithstanding the undercutting by competing Indian mills themselves. The buoyancy in the export market did cast a cascading effect on the domestic yarn market prices which have firmed up by Rs 7-10 per kg.

Mr Velayutham traced part of the improvement in the market condition in the yarn sector to the Central Government bringing hank yarn under the excise net, thereby removing the loophole for duty evasion in the industry. The removal of the excise exemption to hank yarn has helped movement of cone yarn to pick up and the same measure from the Government has forced the decline in the incidence of false declaration of cone yarn as hank yarn.

The apex industrial association has also seen a positive side in the increase in the duty drawback (DDB) fixed for handloom products which besides hastening the process for a complete `Cenvat' chain will create a level playing field.

The association which took up cudgels against the excise duty evasion for quite some time now and used to attribute the industry's sufferings to duty evasion has now felt that with the Government plugging the evasion routes, it is but natural the general market condition should improve.

It wanted that there should be no dilution in the enforcement against excise evasion through misdeclaration.

The SIMA even while welcoming the drawback rates for handloom products, felt the cut in the DDB rates for the knitted and woven garments would blunt the export sentiments and suggested the Government maintain the status quo on the DDB rate for textile products, considering the fact that the industry was showing signs of recovery.

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