The Hindu Business Line : Chidambaram hints at duty relief for man-made fibres in next Budget

The Finance Minister, Mr P. Chidambaram, with the Minister for Textiles, Mr Shankarsinh Vaghela, watched by the Chairman, ICMF, Dr B.K. Krishnaraj Vanavarayar (extreme right), and the Managing Director, Crisil, Mr Ravi Mohan (left), at the release of the Vision Statement of ICMF for the textile industry in the Capital on Thursday. - Kamal Narang

New Delhi , Aug. 5

THE Finance Minister, Mr P. Chidambaram, has strongly hinted that the existing tax structure on man-made fibres would be altered in the next budget (2005-06) to give a fillip to this segment of the domestic textile industry.

"We need to give a fillip to man-made and synthetic fibres. This is the fabric of a poor man. Given the direction that this year's budget has set for taxation of textile goods, you can guess where next budget will go," Mr Chidambaram told the members of the Indian Cotton Mills' Federation (ICMF) after releasing its vision statement for the textile sector.

While doing away with the mandatory excise duty on pure cotton, wool and silk (whether it is fibre, yarn, fabric or garment) in the current year's budget, he had announced that it would be applicable on all man-made staple fibres, polyester filament yarn and man-made filament yarn.

The domestic synthetic fibre industry has been in the last few years making a case for lowering the excise duty on man-made fibres and polyester yarns.

In his address at the ICMF function held here on Thursday, the Minister held that the poor would in the long run stand to gain by using man-made fabrics.

"Unfortunately, the historical taxation baggage has forced the poor to buy cotton and the rich to wear polyester. This must be corrected," he said.

He advised the mills' sector to find ways to become more competitive than the powerloom sector and retain its share in weaving. He also asked it to introspect as to why it was losing ground to the powerloom sector.

"We must recognise that in the next 10-15 years, investments in weaving would go mainly to the powerloom sector," Mr Chidambaram said.

While 90 per cent of spinning currently takes place in the organised sector, he pointed out that only 3.2 per cent of weaving took place in the mills sector and about 82 per cent of weaving was being done in powerloom.

Commenting on the vision statement prepared by Crisil, the Minister wondered as to why ICMF was "reluctant" to adopt stiffer challenges, especially in export target for the textile industry.

Even while agreeing with the rating agency that investments of about Rs 1,40,000 crore would be required in the textile industry for the period up to 2010, Mr Chidambaram, however, said that he was disappointed with the Crisil's export target of $40 billion in 2010.

"Your export estimate of $40 billion for textiles and apparel falls short of Government's expectations of $50-billion exports in 2010. I feel that $50 billion of exports is not beyond your grasp", he said.

Stating that a National Manufacturing Competitiveness Council would be set up within the next two weeks, Mr Chidambaram asked the Federation to recommend the names of two outstanding professionals in the textile industry who would be competent to deal with aspects of manufacturing competitiveness.

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