Apparel August 2019 Apparel August 2019 issue | Page 64

MARKET WATCH
Union Budget 2019–2020:
A Mixed Bag for the Textile
and Apparel Industries
Members from GTIG,
China, visit the CMAI Office
A Two-Member Delegation from Jiangsu Guotai
International Group Guomao Co. Ltd (GTIG),
China, visited the CMAI Office on August 6, 2019,
to understand the Investment opportunities in
India’s Apparel Sector, and the way forward. Wazir
Advisors Pvt. Ltd also made a Presentation on the
same for the benefit of the Delegation.
Seen here (from left to right): Mr Prashant
Agarwal, Managing Director, Wazir Advisors Pvt.
Ltd; Mr Chen Xiaodong, Director/CEO, GTIG; Mr
Rahul Mehta, President, CMAI; Mr Jack Liu, Chief
Representative of African Office, GTIG; and Mr
Mohan Sadhwani, Executive Director, CMAI
The Clothing Manufacturers Association of India
(CMAI) stated that the Union Budget 2019–20,
announced by the Hon’ble Finance Minister, Smt.
Nirmala Sitharaman, is a mixed bag for the Textile and
Apparel Industries.
Giving his reaction on the Budget, Mr Rahul Mehta,
President, CMAI, stated that the extension of Lower
Rate of 25 per cent Corporate Tax with an Annual
turnover of up to R400 Crore is a Welcome step.
Currently, this Rate is only applicable to Companies
having an Annual turnover of up to R250 Crore. He
added that the infusion of R70,000 Crore Capital
into Public Sector Banks will ease the Current Credit
Squeeze. Also, R350 Crore allocated for two per cent
Interest Subvention for all GST-registered MSMEs
on Fresh or Incremental Loans will lend a big thrust
to Micro, Small, and Medium Enterprises (MSMEs).
Considering that Over 80 per cent of the Domestic
Apparel Industry is in the MSME Sector, all these
measures could provide a boost to the Sector.
On the other hand, Mr Mehta stated that while
details have not been announced, the relaxing of local
sourcing norms for FDI in Single-Brand Retail can be
detrimental to the Growth of the Domestic Apparel
Manufacturing Industry. He felt that this move could
work against the Government’s drive towards Make in
India. This will, however, Encourage FDI in Retail.
Declining Export of Cotton Yarn: A Matter of Deep Concern
Mr Rahul Mehta, President, CMAI, felicitated Dr K V Srinivasan, Chairman, Texprocil in a statement,
which said that exports of cotton yarn from India in the first quarter of April–June 2019 have fallen
by a steep 33 per cent—from 338 million kilograms for the period of April–June 2018 to 226 million
kilograms in April–June 2019.
The cotton yarn sector has been one of the pillars of the Indian textile industry. It is highly modernised
and technology-driven.
The steep fall in its Exports has been caused due to a variety of reasons including the Duty-Free access for
Dr K V Srinivasan,
Import of cotton yarn given to countries such as China and Bangladesh from April 2019.
Chairman, TEXPROCIL
Considering the large-scale Investment in the spinning sector and sluggish demand in the Domestic
markets, Exports are the only avenue to ensure uninterrupted production and capacity utilisation.
Dr K V Srinivasan pointed out that even though cotton yarn is a value-added product, it has been excluded from Export
benefits such as Interest Subvention, Merchant Exports from India Scheme (MEIS), and Rebate of State and Central Taxes and
Levies (RoSCTL) scheme.
In view of the above, Dr K V Srinivasan appealed to the Government to include cotton yarn in the Interest Subvention scheme
and also rebate embedded taxes like Agricultural Cess, Mandi Tax, Power and Fuel Surcharge. The RoSCTL scheme, which
rebates these levies, should be extended to the cotton yarn sector at the earliest.
This will ensure that only products are exported and not taxes. This will also give impetus to rising cotton prices, and more
appreciation to the Rupee, whose competitiveness has been eroding of late.
Dr K V Srinivasan stated that in case the current trends of declining exports continue in the next quarter, it will lead to the
closure of several spinning units in the near future, resulting in layoffs.
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I APPAREL I
August 2019