Relief Route

New Delhi, July 5: As finance minister Pranab Mukherjee presents the budget tomorrow, all eyes will be on the textile industry, which has been hit hard by the global recession.

Textile, which is the largest employer after agriculture, has witnessed about 100,000 layoffs.

Officials said the government was considering some packages and duty changes to help the industry overcome the crisis.

Rakesh Vaid, chairman of the Apparel Export Promotion Council, said unless the government took concrete steps like China, Bangladesh, Pakistan, Cambodia and Vietnam, the garment industry could face a major damage.

The wish list comprises an increase in duty drawback and duty entitlement passbook scheme rates for synthetic textile items to 5 per cent from 3 per cent, funds for exporters at 4-6 per cent interest rate, raising interest rate subsidy to 4 per cent from 2 per cent for synthetic textiles exports and extension of the time frame for the subsidy to March 31, 2010.

Other demands include the reduction of excise duty on textile machineries to 4 per cent from 10 per cent, slashing duty on polymers to 4 per cent and the abolition of special additional duty of 4 per cent on textile items.

D.K. Nair, secretary-general of the Confederation of Indian Textile Industry, said, “Excise and customs duties on all man-made fibre may be removed. Countervailing duties imposed on the import of all fibres may be done away with, since access to cheaper global fibres will improve cost-competitiveness.”

The economic survey has suggested that specific customs duties on textiles be revised to match ad valorem tax rates.

Ad valorem rates are a proportion of the value of a product and increase with the rise in the product value. “Revise specific duties in the textile sector to ensure that they approximate a similar ad valorem rate as originally intended,” the survey said.

“The council is demanding certain benefits, which are legitimate to the industry that employs over six million, who are least educated and poor,’’ Raj Kumar Malhotra, chairman of the Export Promotion Council for Handicrafts, said.

Textile exports declined about 10 per cent to $20 billion in 2008-09 compared with the previous fiscal because of a slump in demand in the US and Europe.

The industry also suffered from the high cost of raw cotton. The government had increased the minimum support price 40 per cent in the last fiscal.